Primerica Inc
For the period ended Dec 31, 2024. Filed Feb 28, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 28, 2025
PRI$290.58+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-28.
0000950170-24-022262
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-28.
0000950170-25-029882
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 279 previous paragraphs and 214 current paragraphs.
123 unchanged; 68 reworded; 21 added; 84 removed; 4 previous and 2 current paragraphs rearranged.
Tables are not compared: 24 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (21)
Current report
The Company previously reported a Senior Health segment, which consisted of e-TeleQuote Insurance, Inc. and subsidiaries, a marketer of Medicare-related insurance products underwritten by third-party health insurance carriers to eligible Medicare beneficiaries (the “Senior Health business”) that was disposed of as of September 30, 2024, and is now reported in discontinued operations for all periods presented. Refer to Note 2 (Discontinued Operations) to our consolidated financial statements included elsewhere in this report for further details.
Current report
Significant inflation that followed the peak of the COVID-19 pandemic has led to an elevated cost of living for middle-income families. We believe that the higher cost of living has adversely impacted persistency for term life insurance policies. While the rate of inflation has been normalizing from its peak in 2022, lapses of term life insurance policies have remained above long-term historical levels. The continuation of the elevated cost of living could adversely impact demand for our products.
Current report
New life-licensed independent sales representatives increased in 2024 compared to 2023 and 2022 as the pipeline of recruits has increased each year-over-year.
Current report
New policies issued increased each year primarily due to year-over-year growth in the number of life-licensed independent sales representatives.
Current report
Policy terminations increased year-over-year but were consistent when measured as a percentage of beginning face amount in-force. Policy terminations were elevated in all periods with the high cost of living a likely key contributing factor. In 2024 and 2022, the effect of a stronger U.S. dollar in relation to the Canadian dollar unfavorably impacted the translated face amount in-force. During 2023, the strengthening of the Canadian dollar relative to the U.S. dollar contributed to the increase in face amount.
Current report
Product sales. Investment and savings product sales increased in 2024 from 2023, primarily due to our ability to leverage increased demand across all product lines except for Canadian segregated funds. The increase in demand was driven by strong equity market performance in the period leading up to and including 2024. In particular, variable annuity product sales continued to lead the growth in sales as the guarantees offered by these products have become more appealing to investors given strong equity market performance and elevated interest rates. Marginally offsetting the increase in product sales was lower year-over-year sales of Canadian segregated funds as sales of investments in new Canadian segregated fund accounts significantly decreased after May 2023 due to implemented regulations in Canada. See “Regulatory Changes” below for more information on Canadian regulations.
Current report
Average client asset values. Average client asset values increased in 2024 compared to 2023. The increase was driven by the cumulative effect of strong market performance and net client inflows, partially offset by the effect of a stronger U.S. dollar in relation to the Canadian dollar.
Current report
Total revenues. Total revenues increased in 2024 from 2023 due to increases in commissions and fees earned in our Investment and Savings Products segment, net premiums earned in our Term Life Insurance segment, and net investment income and investment gains earned in our Corporate and Other Distributed Products segment. Also contributing to the increase was a $50.0 million gain recognized in 2024 within other, net revenue in our Corporate and Other Distributed Products segment related to proceeds received under a Representation and Warranty insurance policy purchased in connection with the acquisition of the Senior Health business. For more information on the Representation and Warranty insurance policy proceeds, see Note 4 (Segment and Geographical Information)
Current report
Total benefits and expenses. Total benefits and expenses increased in 2024 from 2023 largely due to higher sales commissions in our Investment and Savings Products segment. In addition, higher amortization of DAC, insurance expenses and benefits and claims in our Term Life Insurance segment contributed to the increase in benefits and expenses. Also contributing to the increase in 2024 was higher other operating expenses in our Investment Savings Products and Corporate and Other Distributed Products segments. Insurance expenses and other operating expenses were higher in 2024 due to higher variable growth-related costs, technology investments, and employee-related costs, which includes higher incentive compensation due to strong company performance. Partially offsetting these increases was a higher future policy benefits remeasurement gain compared to 2023 in our Term Life Insurance segment and lower benefits and claims in our Corporate and Other Distributed Products segment. These movements are discussed in further detail in the Segment Results section below.
Current report
Income taxes. Our effective income tax rate from continuing operations for 2024 of 23.3% was largely consistent with 23.4% in 2023.
Current report
Loss from discontinued operations, net of income taxes. Loss from discontinued operations, net of income taxes relates to the Senior Health business, which was disposed of as of September 30, 2024 and is reported in discontinued operations for all periods presented. Refer to Note 2 (Discontinued Operations) to our consolidated financial statements included elsewhere in this report for further details.
Current report
Loss from discontinued operations, net of income taxes. Loss from discontinued operations, net of income taxes relates to the Senior Health business, which was disposed of as of September 30, 2024 and is reported in discontinued operations for all periods presented. Refer to Note 2 (Discontinued Operations) to our consolidated financial statements included elsewhere in this report for further details.
Current report
Benefits and claims. Benefits and claims increased during 2024 compared to 2023. Direct benefits and claims increased due to the growth in the business. Year-over-year claims incurred in 2024 were consistent with amounts incurred in 2023 despite the growth in the in-force book of business. Claims experience was lower than our long-term actuarial assumptions as discussed in Note 11 (Future Policy Benefits) to our consolidated financial statements included elsewhere in this report.
Current report
Future policy benefits remeasurement (gain) loss. Future policy benefits remeasurement gain increased during 2024 compared to 2023 and represents the impact of long-term assumption changes made during the third quarter of 2024 in connection with the annual assumption review as well as differences in experience variances that occurred in each period. The gain recognized in 2024 is primarily due to an assumption change related to the reduction of the expected cost of waiver of premium disability benefits. Refer to Note 11 (Future Policy Benefits) to our consolidated financial statements included elsewhere in this report for further details.
Current report
Insurance expenses. Insurance expenses increased during 2024 compared to 2023 due to higher costs resulting from growth in the business, employee-related costs, and higher variable expenses to support recruiting and licensing.
Current report
Commissions and fees. Commissions and fees increased during 2024 compared to 2023 primarily driven by higher sales-based and asset-based revenues. The increase in sales-based revenue was largely the result of higher product sales for variable annuities and U.S. mutual fund product sales. Higher asset-based revenues were driven by an increase in average client assets in 2024 versus the prior year.
Current report
Other operating expenses. Other operating expenses increased in 2024 from 2023 primarily due to higher growth-related costs and employee-related costs.
Current report
Total benefits and expenses. Total benefits and expenses increased in 2024 from 2023 due to a future policy benefits remeasurement loss in the third quarter of 2024 recorded in connection with the refinement of assumptions on a closed block of non-term life insurance as well as higher other operating expenses, largely higher employee-related costs, and to a lesser extent technology costs.
Current report
The higher employee-related costs were driven by increased incentive compensation due to strong company performance. These increases were partially offset by a decrease in benefits and claims as a result of a credit loss recognized during 2023 for the remaining ceded reserves on a closed block of non-term life insurance business from an insolvent reinsurer that was ordered into liquidation.
Current report
Operating Activities. Cash provided by operating activities increased in 2024 from 2023 primarily driven by the increase in net income excluding non-cash impairments recognized in discontinued operations as well as the gain recognized from insurance proceeds received under a Representation and Warranty insurance policy in 2024. In addition, timing differences of purchases and maturities of trading securities contributed to the year-over-year increase in cash provided by operating activities.
Current report
Investing Activities. Cash used in investing activities increased in 2024 from 2023 primarily due to fluctuations in the timing of maturities and reinvestments of debt securities held in our available-for-sale investment portfolio as well as an overall increase in the size of the portfolio given the increase in our term life insurance in-force. In addition, $21.4 million of cash was included in the disposal of the Senior Health business. The $50.0 million received under a Representation and Warranty insurance policy partially offset the increase in cash used in investing activities in 2024.
Removed paragraphs (84)
Previous report
The Company adopted Accounting Standards Update No. 2018-12, Financial Services –Insurance (Topic 944)—Targeted Improvements to the Accounting for Long-Duration Contracts (“LDTI”) on January 1, 2023. The amendments in LDTI changed accounting guidance for insurance companies that issue long-duration contracts, such as term life insurance and segregated funds products. All prior period financial information has been restated as of January 1, 2021 (the “Transition Date”). See Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies) to our consolidated financial statements included elsewhere in this report for more information about the adoption of LDTI.
Previous report
Inflation remained elevated from historical levels during 2023, although to a lesser extent than 2022 and 2021, which led to an increased cost of living for middle-income families. Continued elevated cost of living could impact demand for our products.
Previous report
Certain year-over-year comparisons are impacted by the effects of the COVID-19 pandemic (“COVID-19”). Results during 2021 and the first quarter of 2022 reflected the continued impact of COVID-19, namely strong policyholder persistency and elevated claims activity in our Term Life Insurance segment. The elevated impacts of COVID-19 on our results tapered off subsequent to the first quarter of 2022.
Previous report
New life-licensed independent sales representatives increased in 2023 compared to 2022 primarily due to strong life-licensing momentum experienced throughout 2023. The strong life-licensing activity realized in 2023 was primarily driven by the heightened emphasis placed by the Company and independent sales force leaders on licensing and the continued benefits of improvements to the licensing process, which include new licensing progress-tracking tools and an increased number of in-person licensing classes. New life-licensed independent sales representatives increased in 2022 compared to 2021 primarily due to the elevated recruiting volume discussed above combined with licensing process improvements throughout 2022 such as the restoration of in-person licensing classes.
Previous report
New policies issued during 2023 increased compared to adjusted 2022 as a result of continued growth in the number of life-licensed independent sales representatives and the customer appeal of our new term life insurance products that were introduced in late 2022.
Previous report
New policy issuance metrics for 2021 are not comparable to the information shown for 2023 and adjusted 2022 due to the change in how policies are structured in relation to individual lives as described in the footnote to the table above. The discussion of new policy issuance comparisons between 2022 and 2021 under our legacy policy structure can be found in "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “2022 MD&A”).
Previous report
The decrease in investment and savings product sales in 2022 from 2021 was led by lower sales of retail mutual funds and variable annuities as investor demand during 2022 deteriorated in response to negative market conditions. Demand for investment and savings products was robust in 2021 due in large part to positive equity market conditions. The reversal of the positive equity market conditions in 2022 led to the year-over-year decline in product sales. Also contributing to the decline in product sales from 2021 to 2022 was the transition to the new principal distributor Canadian mutual fund product in July 2022 as described above.
Previous report
Senior Health Key Performance Indicators.
Previous report
Submitted Policies and Approved Policies
Previous report
Submitted policies. Submitted policies represent the number of completed applications that the applicant has authorized e-TeleQuote Insurance, Inc. (“e-TeleQuote”) to submit to the health insurance carrier. The applicant may need to take additional action, including providing subsequent information, before the application is reviewed by the health insurance carrier.
Previous report
Approved policies. Approved policies represent an estimate of submitted policies approved by the health insurance carriers for the identified product during the indicated period. Not all approved policies will go in force. In general, the relationship between submitted policies and approved policies has been seasonally consistent. Therefore, factors impacting the number of submitted policies generally impact the number of approved policies.
Previous report
The number of Senior Health submitted policies and approved policies were as follows:
Previous report
The Senior Health segment experiences notable seasonality with the strongest demand occurring in the fourth quarter due to the Medicare Annual Election Period (“AEP”) from October 15 th to December 7 th. We also experience seasonally higher demand in the first quarter due to the Medicare Open Enrollment Period (“OEP”) from January 1 st to March 31 st, which allows individuals to switch Medicare Advantage plans. Meanwhile, the second and third quarters experience seasonally lower demand as the focus for submitted policies is limited to beneficiaries that are dual eligible (Medicare and Medicaid), qualify for a special enrollment period, recently aged into Medicare or are enrolling off of an employer-sponsored plan, and other less common situations.
Previous report
The number of submitted and approved policies decreased in 2023 compared to 2022 primarily due to the Company’s efforts to temper growth in favor of developing more efficient lead procurement and conversion, a decline in the number of tenured e-TeleQuote licensed health insurance agents and an increase in newly-hired licensed health insurance agents that resulted in lower productivity. The number of submitted and approved policies in 2022 compared to 2021 is primarily impacted by the timing of the acquisition of e-TeleQuote on July 1, 2021. A full year of submitted and approved policies are included in 2022 compared to only six months for 2021. The number of submitted and approved policies in 2022 also reflects the Company’s efforts to scale back growth and limit the number of agents in favor of developing more efficient lead procurement.
Previous report
Senior Health Policies Sourced by Primerica Independent Sales Representatives
Previous report
Primerica independent sales representatives are certified by Primerica to refer eligible Medicare beneficiaries to e-TeleQuote licensed health insurance agents for potential enrollment in policies distributed by e-TeleQuote after completion of a brief certification course offered by Primerica.
Previous report
The number of submitted policies sourced by Primerica independent sales representatives measures the number of Senior Health policies submitted by e-TeleQuote to its third-party health insurance carriers that originated through the Primerica independent sales force.
Previous report
The number of submitted policies sourced by Primerica independent sales representatives increased in 2023 compared to 2022 primarily due to increasing experience with the Primerica referral program. The number of submitted policies sourced by Primerica independent sales representatives during 2022 increased compared to 2021 primarily due to the timing of our acquisition of e-TeleQuote on July 1, 2021. A full year of submitted policies sourced by Primerica independent sales representatives are included during 2022 compared to only six months for 2021.
Previous report
Lifetime Value of Commissions and Contract Acquisition Costs
Previous report
Lifetime value of commissions (“LTV”). LTV represents the cumulative total of commissions and administrative fees estimated to be collected over the expected life of a policy for policies approved during the period. For more information on LTV, refer to Note 19 (Revenue from Contracts with Customers) of our consolidated financial statements included elsewhere in this report and the Factors Affecting our Results – Senior Health Segment section.
Previous report
Contract acquisition costs (“CAC”). CAC represents the total direct costs incurred to acquire approved policies. CAC are primarily comprised of the costs associated with generating or acquiring leads, including fees paid to Primerica Senior Health certified independent sales representatives, as well as compensation, licensing, and training costs associated with our team of e-TeleQuote licensed health insurance agents in addition to per policy technology costs. The number of e-TeleQuote licensed health insurance agents, agent tenure, attrition rate and productivity all impact CAC. Other than costs incurred to assist beneficiaries who are switching plans with the same carrier, we incur the entire cost of approved policies prior to enrollment and prior to receiving our first commission-related payment.
Previous report
Per policy metrics for LTV and CAC measure our ability to profitably distribute Senior Health insurance products.
Previous report
The LTV per approved policy, CAC per approved policy, and ratio of LTV to CAC per approved policy were as follows:
Previous report
LTV per approved policy reflects current estimates for renewal rates, policy retention and chargeback activity taking into consideration the most recent experience through December 31, 2023. LTV per approved policy increased during 2023 compared to 2022 primarily due to the inclusion of the majority of marketing development revenue in LTV beginning in the fourth quarter of 2023 due to changes in carrier contracts. Prior to the fourth quarter of 2023, all marketing development revenue received from carriers was recognized in Other, net revenue. Also contributing to the higher LTV in 2023 versus 2022 were higher commission rates from annual rate increases and stabilizing policy churn. The Company saw lower renewal retention rates during 2022 compared to historical experience due to an increased number of consumers who changed plans and increased plan offerings by carriers. This dynamic led to the lower LTV estimated per approved policy in 2022 compared to 2021.
Previous report
CAC per approved policy increased in 2023 compared to 2022 primarily due to the impact from a lower mix of tenured e-TeleQuote licensed health insurance agents. During 2023, e-TeleQuote experienced higher agent attrition while it planned for an increase in its agent base, which led to increased costs to hire, train and license new agents in preparation for AEP and OEP. In addition, lower tenured agents do not convert leads to approved policies as efficiently as more tenured agents, contributing to higher CAC per approved policy. Comparing 2022 to 2021, the reduction in CAC per approved policy reflects a number of factors including a higher ratio of tenured agents, revised lead acquisition strategies, improved lead routing, and enhancements in agent training.
Previous report
Worker classification standards. In the U.S., the Department of Labor (“DOL”) issued a final rule interpreting the “economic realities” worker classification standard applicable to the Fair Labor Standards Act. The DOL’s interpretation generally aligns with legal precedent, relying on an analysis of six typical factors indicating worker status and taking into account the “totality of the circumstances”. Other federal and state legislative and regulatory proposals regarding worker classification have also come under consideration. It is difficult to predict what the outcome of worker classification activity may be. Changes to worker classification laws could impact our business as sales representatives (other than those hired by e-TeleQuote) are independent contractors.
Previous report
Fiduciary standards for investment recommendations. In October 2023, the DOL proposed a fiduciary rule package (“DOL Fiduciary Proposal”) that would revise the fiduciary definition and amend certain prohibited transaction exemptions relied on by fiduciaries subject to the Employee Retirement Income Security Act of 1974 for the receipt of compensation. In response to prior rulemakings and guidance, our business already utilizes the DOL’s prohibited transaction exemption established in 2020 for fiduciary recommendations. As a proposed rulemaking package, the DOL Fiduciary Proposal is subject to public comments and challenges. While its final outcome is uncertain, we anticipate that if the DOL Fiduciary Proposal were finalized as proposed then we would not have to make substantial adjustments to our Investment and Savings Products business operations.
Previous report
Refer to the Business Trends and Conditions section for discussion of the potential impact on our business from COVID-19.
Previous report
Senior Health Segment. The Senior Health segment results are primarily driven by the number of approved policies, LTV per approved policy and tail revenue adjustments, CAC per approved policy, and other revenue.
Previous report
Approved policies. Approved policies represent an estimate of submitted policies approved by the health insurance carriers for the identified product during the indicated period. Not all approved policies will go in force. In general, the relationship between the number of submitted policies and approved policies has been seasonally consistent. Therefore, factors impacting the number of submitted policies generally impact the number of approved policies. Revenue is primarily generated from approved policies, and LTVs are recorded when the enrollment is approved by the applicable health insurance carrier. Medicare Advantage plans make up nearly all of the approved policies we distribute. The number of approved policies is influenced by the following:
Previous report
the number and tenure of our licensed health insurance agents;
Previous report
our ability to hire and train our team of e-TeleQuote licensed health insurance agents to manage leads and help eligible Medicare beneficiaries through the enrollment process;
Previous report
our ability to generate and obtain leads for our team of e-TeleQuote licensed health insurance agents;
Previous report
the size and growth of the population of senior citizens in the United States;
Previous report
the appeal of government-funded Medicare Advantage plans that provide privately administered healthcare coverage with enhanced benefits relative to traditional Medicare;
Previous report
our health insurance carrier relationships that allow us to offer plans that most appropriately meet eligible Medicare beneficiaries’ needs; and
Previous report
our ability to compete with national direct to consumer brokers, health insurance carriers that directly market to beneficiaries and other independent brokers.
Previous report
LTV per approved policy and tail revenue adjustments. When a policy is approved by the health insurance carrier, commission revenue is recognized based on an estimated LTV per approved policy. LTV per approved policy is the cumulative total of commissions (including administrative and marketing development payments received on a per approved policy basis) estimated to be collected over the expected life of a policy, subject to constraints applied in accordance with our revenue recognition policy. Specifically, LTV per approved policy is equal to the sum of the initial commissions and payments, less an estimate of chargebacks for paid policies that are disenrolled during the first policy year, plus forecasted renewal commissions. This estimate is driven by several factors including, but not limited to, commission rates from health insurance carriers, expected policy turnover, emerging chargeback activity and applied constraints. These factors may result in varying values from period to period.
Previous report
We recognize adjustments to revenue outside of LTV for approved policies from prior periods when our cash collections are, or are expected to be, different from the estimated constrained LTVs, which we refer to as tail revenue adjustments. The recognition of tail revenue adjustments results from a change in the estimate of expected cash collections when actual cash collections or communicated rate increases have indicated a trend that is different from the estimated constrained LTV. Tail revenue adjustments can be positive or negative, and we recognize positive adjustments to revenue when we do not believe it is probable that a significant reversal of cumulative revenue will occur.
Previous report
CAC per approved policy. Results are also driven by the costs of acquisition, which is defined as the total direct costs incurred per approved policy. Our costs of acquisition are primarily comprised of the cost to generate and acquire leads, including fees paid to Primerica Senior Health certified independent sales representatives, and the labor, benefits, bonus compensation, licensing and training costs associated with our team of e-TeleQuote licensed health insurance agents. Other than costs incurred to assist beneficiaries with switching plans within the same carrier, we incur our entire cost of approved policies prior to enrollment and prior to receiving our first commission related payment. Factors that impact our costs of acquisition per approved policy include:
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Reworded paragraphs (68)
Previous wording
The relative strength and stability of financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levels and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers, which can drive or dampen recruiting. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, interest rates and equity market returns impact consumer demand for the savings and investment products we distribute. Our customers’ perception of the strength of the capital markets may also influence their decisions to invest in the investment and savings products we distribute.
Current wording
The relative strength and stability of financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levels and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers, which can drive or dampen recruiting. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, equity market returns and interest rates impact consumer demand for the investment and savings products we distribute. Our customers’ perception of the strength of the capital markets may also influence their decisions to invest in the investment and savings products we distribute.
Previous wording
The financial and distribution results of our operations in Canada, as reported in U.S. dollars, are affected by changes in the currency exchange rate. As a result, changes in the Canadian dollar exchange rate may significantly affect the result of our business for all amounts translated and reported in U.S. dollars.
Current wording
The financial and distribution results of our operations in Canada, as reported in U.S. dollars, are affected by changes in the currency exchange rate. As a result, changes in the Canadian dollar exchange rate may significantly affect the results of our business for all amounts translated and reported in U.S. dollars.
Previous wording
Significant volatility in capital markets in recent periods has continued to impact our business. Volatility in capital markets influenced product sales and client asset values that drive revenue in the Investment and Savings Products segment. In addition, the sharp rise in market interest rates during 2022 and further rate increases in 2023 have driven unrealized losses in our investment portfolio, although a sharp decline in market rates during the fourth quarter of 2023 reduced our unrealized losses. We have not recognized losses caused by interest rate volatility in the income statement as we have the ability to hold these investments until maturity or a market price recovery, and we have no present intention to dispose of them. Increased interest rates have also led to increases in net investment income as we are able to earn higher returns on our new debt securities purchases and cash balances.
Current wording
Volatility in capital markets in recent periods has continued to impact our business. Strong equity performance has influenced product sales and client asset values that drive revenue in the Investment and Savings Products segment. In addition, the sharp rise in market interest rates during 2022 and further rate increases in 2023 have largely driven the unrealized losses that have accumulated in our investment portfolio. We have not recognized losses caused by interest rate volatility in the income statement for securities where we have no present intention to dispose of them and we have the ability to hold these investments until maturity or a market price recovery. Elevated interest rates have also led to increases in net investment income as we are able to earn higher returns on our new debt securities purchases and cash balances.
Previous wording
The number of new recruits increased in 2023 compared to 2022. Recruiting activity was strong in 2023 without the benefit of significant recruiting incentives as the Company continues to see a high degree of interest from people who are attracted to the business opportunity. The number of new recruits increased in 2022 compared to 2021 primarily due to strong recruiting efforts and the offering of special recruiting incentives following our biennial convention held in June 2022. Approximately 83,000 individuals were recruited while the special incentives were in place. Various recruiting incentives in both 2022 and 2021 also positively impacted recruiting results during each year.
Current wording
The number of new recruits increased in 2024 compared to 2023. The year-over-year increase was primarily driven by the momentum following our biennial convention held in July 2024 and special recruiting incentives that were offered in connection with the convention. Approximately 81,000 individuals were recruited while the special incentives were in place. Recruiting activity was strong in 2023 without the benefit of significant recruiting incentives as compared with recruiting activity in 2022, which benefited from the impact of the biennial convention held in June 2022 and associated recruiting incentives. Positive sentiment regarding interest in our business opportunity along with the demand for supplemental income likely contributed to the strong recruiting activity in the comparable periods.
Previous wording
The number of life-licensed independent sales representatives increased during both 2023 and 2022, reflecting strong recruiting and improvements to the licensing process as discussed above.
Current wording
The number of life-licensed independent sales representatives increased each year reflecting strong recruiting and licensing activity as discussed above.
Previous wording
For the year ended December 31, 2022, the previously reported number of new policies issued has been adjusted for comparability purposes as a result of our new term life insurance products introduced in October 2022, which modified how policies are structured in relation to individual lives. Historically, two adult lives could be covered under a single policy by adding a spouse rider. To better align risk and pricing in our new life insurance products, we eliminated this rider and now sell a separate policy for each insured life. Results for the year ended December 31, 2023 reflect additional policies issued to reflect the former spouse rider with a separate policy in the new life insurance products. To make year-over-year comparisons more consistent, we have provided estimates for the year ended December 31, 2022.
Current wording
For the year ended December 31, 2022, the previously reported number of new policies issued has been adjusted for comparability purposes as a result of our new term life insurance products introduced in October 2022, which modified how policies are structured in relation to individual lives. Historically, two adult lives could be covered under a single policy by adding a spouse rider. To better align risk and pricing in our new life insurance products, we eliminated this rider and now sell a separate policy for each insured life. Results for the years ended December 31, 2024 and 2023 reflect additional policies issued to reflect the former spouse rider with a separate policy in the new life insurance products. To make year-over-year comparisons more consistent, we have provided estimates for the year ended December 31, 2022.
Previous wording
The average number of life-licensed independent sales representatives increased during both 2023 and 2022 from 131,315 at December 31, 2021 as a result of strong recruiting and improvements to the licensing process as discussed above.
Current wording
The average number of life-licensed independent sales representatives increased each year as a result of strong recruiting and licensing activity that drove growth in the size of the independent sales force as discussed above.
Previous wording
The face amount of term life policies in-force increased from December 31, 2022 to December 31, 2023 as the face amount issued continued to exceed the face amount terminated. Issued face amount during 2023 increased from 2022 due to an increase in both the number of new policies issued and higher average face amounts per life insured. Policy terminations were elevated across many policy durations during 2023 with the higher cost of living likely a key contributing factor. The early part of 2022 was the last period that reflected the benefit of the higher persistency experienced during the height of the COVID-19 pandemic. The face amount of term life policies in-force increased from December 31, 2021 to December 31, 2022 as the face amount issued continued to exceed the face amount terminated. The increase was partially offset by movement in the foreign exchange rate as the U.S. dollar strengthened in relation to the Canadian dollar, which negatively impacted the translated face amount in force as of December 31, 2022. Issued face amount during 2022 decreased versus 2021 due to a decrease in new policies issued partially offset by higher average issued face amounts. New policies issued decreased and policy terminations increased in 2022 versus 2021 as new policy demand and persistency normalized toward pre-COVID-19 pandemic levels.
Current wording
The face amount of term life policies in-force increased each year as the face amount issued continued to exceed the face amount terminated. Issued face amounts increased each year due to the increase in the number of new policies issued as discussed above.
Previous wording
Our average issued face amount per new policy increased to approximately $256,100 in 2023 compared to $228,000 in 2022, using the adjusted 2022 number of new policies issued as discussed above. The average issued face amount per new policy was higher in 2023 compared with adjusted 2022 due to the launch of our new term life insurance products, which drove an increase in demand for policies at higher face amount levels. For discussion of average issued face amount per new policy between 2022 and 2021 under our legacy policy structure, refer to the 2022 MD&A.
Current wording
Our average issued face amount per new policy was approximately $255,200 in 2024 compared to $256,100 in 2023 and $228,000 in 2022, using the adjusted 2022 number of new policies issued as discussed above. The average issued face amount per new policy was generally flat in 2024 compared to 2023. The average issued face amount per new policy in 2023 was higher compared with adjusted 2022 due to our new term life insurance products launched in October 2022, which drove an increase in demand for policies at higher face amount levels.
Previous wording
Product sales. Investment and savings product sales decreased in 2023 from 2022, resulting primarily from lower year-over-year product sales during the first half of 2023. The impact of market volatility, the higher cost of living, and the availability of high yield money market and savings account alternatives likely drove the reduction in demand for U.S. mutual funds, total Canadian mutual funds and managed accounts during the first half of 2023. By comparison, product sales in the early part of 2022 reflected strong demand that followed positive equity market returns. The majority of Canadian mutual fund product sales shifted to a no up-front sales commission model in 2023 compared to an up-front sales commission model in the first part of 2022 as a result of the introduction of our new principal distributor Canadian mutual fund product in July 2022. The principal distributor model results in higher asset-based trail commission revenues over time in lieu of up-front compensation at the time of sale. Additionally, Canadian segregated funds product sales decreased in 2023 versus 2022 due to regulatory restrictions on fees charged for these products that went into effect in Canada. Refer to “Regulatory Changes” below for additional information regarding restrictions on segregated funds compensation models in Canada. Partially offsetting these decreases were higher sales of variable annuities in 2023 as investor demand for the guarantee features these products offer increased likely due to recent market volatility.
Current wording
Investment and savings product sales decreased in 2023 from 2022, resulting primarily from lower year-over-year product sales during the first half of 2023. The impact of market volatility, the higher cost of living, and the availability of high yield money market and savings account alternatives likely drove the reduction in demand for U.S. mutual funds, total Canadian mutual funds and managed accounts during the first half of 2023. By comparison, product sales in the early part of 2022 reflected strong demand that followed a period of positive equity market returns. The majority of Canadian mutual fund product sales shifted to a no up-front sales commission model in 2023 compared to an up-front sales commission model in the first part of 2022 as a result of the introduction of our new principal distributor Canadian mutual fund product in July 2022. The principal distributor model results in higher asset-based trail commission revenues over time in lieu of up-front compensation at the time of sale. Additionally, lower year-over-year sales of Canadian segregated funds as sales of investments in new Canadian segregated fund accounts significantly decreased starting in June 2023 due to new regulations in Canada. Partially offsetting these decreases were higher sales of variable annuities in 2023 as investor demand for the guarantee features of these products increased likely due to market volatility during that year.
Previous wording
Rollforward of client asset values. Ending client asset values increased in 2023 from 2022 primarily due to the difference in market performance during each respective period. Net flows remained positive during 2023 but were lower than net flows in 2022. Ending client asset values decreased in 2022 from 2021 primarily due to negative market performance in 2022. Also contributing to the decrease was movement in the foreign exchange rate as the U.S. dollar strengthened in relation to the Canadian dollar, which negatively impacted client asset values as of December 31, 2022. Net flows remained positive for 2022, albeit to a lesser extent than in 2021.
Current wording
Rollforward of client asset values. Ending client asset values increased in 2024 from 2023 primarily due to the differences in market performance during each respective year. Net flows increased in 2024 from 2023. Partially offsetting the increase was movement in the foreign exchange rate as the U.S. dollar strengthened in relation to the Canadian dollar, which negatively impacted client asset values during 2024.
Previous wording
Average client asset values. Average client asset values increased modestly in 2023 compared to 2022. The increase was driven by the timing and changes in market conditions that affected the balance of client assets during each year combined with the impact of positive net flows. Average client asset values decreased modestly in 2022 compared to 2021 primarily due to the timing of negative equity market performance during 2022 partially offset by the impact of positive net flows.
Current wording
Average client asset values increased modestly in 2023 compared to 2022. The increase was driven by the timing and changes in market conditions that affected the balance of client assets during each year combined with the impact of positive net flows.
Previous wording
Average number of fee-generating positions. The average number of fee-generating positions increased in 2023 compared to 2022 and in 2022 compared to 2021 primarily due to the continued cumulative effect of retail mutual fund sales in recent periods. This led to an increase in the number of retail mutual fund positions serviced on our transfer agent recordkeeping platform.
Current wording
Average number of fee-generating positions. The average number of fee-generating positions increased in 2024 compared to 2023 and in 2023 compared to 2022 primarily due to the continued cumulative effect of retail mutual fund sales in recent periods that led to an increase in the number of retail mutual fund positions serviced on our transfer agent recordkeeping platform.
Previous wording
Restrictions on compensation models in Canada. The organization of provincial and territorial securities commissions throughout Canada (collectively referred to as the Canadian Securities Administrators (“CSA”)) implemented rule amendments that prohibit up-front sales commissions by fund companies for the sale of mutual funds offered under a prospectus in Canada (“DSC Ban”), effective June 1, 2022. During 2022, in response to regulatory changes in Canada, we developed a set of mutual fund products with two third-party mutual fund companies that are sold exclusively by our independent sales representatives (the “Principal Distributor funds”). The revenue we receive is primarily in the form of asset-based distribution fees from the mutual fund companies and asset-based service fees that are charged to investors. In turn, the primary compensation we offer independent sales representatives is the option of an up-front sales commission or higher asset-based commissions over time. Although we received the requisite approval, the CSA has indicated that it intends to closely examine the model, including potentially through a public consultation on sales practices, and may require undertakings or consider future amendments that would require modifications to the model, including with respect to its up-front commission features. At this time, we cannot quantify the financial impact, if any, of future changes to our business that may be necessary if our Principal Distributor funds model is required to be modified or discontinued. During the year ended December 31, 2023, Canadian mutual funds represented approximately 13% of our total investment and savings product sales and approximately 13% of our average client asset values.
Current wording
Restrictions on compensation models in Canada. In response to regulatory changes in Canada by the Canadian Securities Administrators (“CSA,” the provincial and territorial securities commissions), we developed a set of mutual fund products with two third-party mutual fund companies that are sold exclusively by the independent sales representatives (the “Principal Distributor funds”). The revenue we receive is primarily in the form of asset-based distribution fees from the mutual fund companies and asset-based service fees that are charged to investors. In turn, the primary compensation we offer independent sales representatives is the option of an up-front sales commission or higher asset-based commissions over time. Although we received the requisite approval, the CSA indicated to us at the time of such approval that the CSA has been closely examining the Principal Distributor funds model, and it launched a public consultation on the model and related sales practices. In response to its public consultation, the CSA may consider future amendments that would require modifications to our Principal Distributor model, including with respect to its up-front commission features. Comments on the consultation are due by April 28, 2025. At this time, we cannot quantify the financial impact, if any, of future changes to our business that may be necessary if our Principal Distributor funds model is required to be modified or discontinued. During the year ended December 31, 2024, Canadian mutual funds represented approximately 12% of our total investment and savings product sales and approximately 13% of our average client asset values.
Previous wording
As mandated by insurance regulators in Canada, a cessation of deferred sales charges on new segregated fund contracts entered into after May 31, 2023 went into effect as previously announced. Deferred sales charges will continue to be allowed on subsequent deposits to existing segregated funds contracts for a period of time; however, insurance regulators will be further evaluating whether to allow this continued use. Our Canadian segregated funds products were primarily sold on a deferred sales charge basis and we paid up-front commissions to the independent sales representatives for the sale of these products. As we anticipated, we experienced a decline in segregated funds product sales beginning in June 2023. Without further clarity from regulators on allowable segregated funds compensation practices, we are unable to evaluate and introduce new compensation practices for the sale of our segregated funds or similar products we could potentially distribute on behalf of third parties. We earn revenue from Canadian segregated funds products based on a percentage of client assets under management. During the year ended December 31, 2023, Canadian segregated funds represented approximately 1% of our total investment and savings product sales and approximately 3% of our average client asset values.
Current wording
As mandated by insurance regulators in Canada, a cessation of deferred sales charges on new segregated fund contracts entered into after May 31, 2023 went into effect as previously announced. Deferred sales charges will continue to be allowed on subsequent deposits to existing segregated funds contracts for a period of time; however, insurance regulators will be further evaluating whether to allow this continued use. Our Canadian segregated funds products were primarily sold on a deferred sales charge basis and we paid up-front commissions to the independent sales representatives for the sale of these products. As we anticipated, we experienced a decline in segregated funds product sales beginning in June 2023. Without further clarity from regulators on allowable segregated funds compensation practices, we are unable to evaluate and introduce new compensation practices for the sale of our segregated funds or similar products we could potentially distribute on behalf of third parties. We earn revenue from Canadian segregated funds products based on a percentage of client assets under management. During the year ended December 31, 2024, Canadian segregated funds represented less than 1% of our total investment and savings product sales and approximately 2% of our average client asset values. Partly in response to the decline in sales discussed above, we entered into an agreement with The Canada Life Assurance Company, a third-party insurance company, to distribute segregated funds underwritten by it. In early 2025, we began the process of rolling out our distribution of these segregated fund contracts. We do not expect the distribution of segregated funds products to materially impact our Investment and Savings Product segment revenues in the near term.
Previous wording
Term Life Insurance Segment. The Term Life Insurance segment results are primarily driven by sales volumes, how closely actual experience matches our pricing assumptions, terms and use of reinsurance, and expenses.
Current wording
Term Life Insurance Segment. The Term Life Insurance segment results are primarily driven by sales volumes, how closely actual experience matches our actuarial assumptions, terms and use of reinsurance, and expenses.
Previous wording
Historically, we have found that while sales volume of term life insurance products between fiscal periods may vary based on a variety of factors, the productivity of sales representatives generally remains within a range (i.e., an average monthly rate of new policies issued per life-licensed independent sales representative between 0.20 and 0.24, as adjusted). The volume of term life insurance products sales will fluctuate in the short term, but over the longer term, our sales volume generally correlates to the size of the independent sales force.
Current wording
Historically, we have found that while sales volume of term life insurance products between fiscal periods may vary based on a variety of factors, the productivity of independent sales representatives generally remains within a range (i.e., an average monthly rate of new policies issued per life-licensed independent sales representative between 0.20 and 0.24, as adjusted). The volume of term life insurance products sales will fluctuate in the short term, but over the longer term, our sales volume generally correlates to the size of the independent sales force.
Previous wording
Actuarial assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates of mortality, persistency, and disability. Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. These variances will be reflected in our financial results by unlocking assumptions and cash flows underlying the liability for future policy benefits (“LFPB”) and ceded reserves that are part of the reinsurance recoverables. See Note 10 (Future Policy Benefits) for more information on LFPB. The variances are also reflected in the projection of future face amount that is the basis for amortizing deferred policy acquisition costs (“DAC”).
Current wording
Actuarial assumptions. The actuarial assumptions that underlie our reserves are based upon our best estimates of mortality, persistency, disability, and interest rates. Our results will be affected to the extent there is a variance between our actuarial assumptions and actual experience. These variances will be reflected in our financial results by unlocking assumptions and cash flows underlying the liability for future policy benefits (“LFPB”) and ceded reserves that are part of the reinsurance recoverables. See Note 11 (Future Policy Benefits) to our consolidated financial statements included elsewhere in this report for more information on LFPB. The variances are also reflected in the projection of future face amount that is the basis for amortizing deferred policy acquisition costs (“DAC”).
Previous wording
Persistency. Persistency is a measure of how long our insurance policies stay in-force. As a general matter, persistency that is lower than our actuarial assumptions adversely affects our results over the long term because we lose the recurring revenue stream associated with the policies that lapse. In general, persistency differences have a minimal impact on our financial results from period to period since DAC is generally amortized on a straight-line basis and the unlocking of the
Current wording
Persistency. Persistency is a measure of how long our insurance policies stay in-force. As a general matter, persistency that is lower than our actuarial assumptions adversely affects our results over the long term because we lose the recurring revenue stream associated with the policies that lapse. In general, persistency differences have a minimal impact on our financial results from period to period since DAC is generally amortized on a straight-line basis and the unlocking of the LFPB adjusts both expected net premiums and expected future policy benefits and spreads any variances over the remaining contract period.
Previous wording
Disability. Our profitability will fluctuate to the extent actual disability rates underlying our waiver benefits, including recovery rates for individuals currently disabled, differ from actuarial assumptions. The waiver benefit is secondary to the death benefit coverage provided. However, the waiver benefit is not reinsured on a yearly renewable term (“YRT”) basis and material changes in assumptions compared to expectations can have a disproportionate impact on our financial results.
Current wording
Disability. Our profitability will fluctuate to the extent actual disability rates underlying our waiver premium benefits, including recovery rates for individuals currently disabled, differ from actuarial assumptions. The waiver of premium benefit is secondary to the death benefit coverage provided. However, the waiver of premium benefit is not reinsured on a yearly renewable term (“YRT”) basis and material changes in assumptions compared to expectations can have a disproportionate impact on our financial results.
Previous wording
Interest Rates. We use a locked-in assumption for future interest rates for reserves underlying our segment results. Policies issued prior to the Transition Date use an interest rate that reflects the portfolio’s current reinvestment rate while policies issued on or after the Transition Date use an upper-medium grade fixed income instrument yield during the period of issue.
Current wording
Interest Rates. We use a locked-in assumption for future interest rates for reserves underlying our segment results. Policies issued prior to the January 1, 2021 transition date of the Company’s adoption of Accounting Standards Update No. 2018-12, Financial Services—Insurance (Topic 944) — Targeted Improvements to the Accounting for Long-Duration Contracts (the “Transition Date”) use an interest rate that reflects the portfolio’s current reinvestment rate while policies issued on or after the Transition Date use an upper-medium grade fixed income instrument yield during the period of issue.
Previous wording
The effect of our reinsurance arrangements on ceded premiums and benefits and expenses on our statements of income follows:
Current wording
The effect of our reinsurance arrangements on ceded premiums and benefits and expenses on our consolidated statements of income follows:
Previous wording
Sales. We earn commissions and fees, such as dealer re-allowances and marketing and distribution fees, based on sales of mutual fund products and annuities in the United States and sales of certain mutual fund products in Canada. Sales of investment and savings products are influenced by the overall demand for investment products in the United States and Canada, as well as by the size and productivity of the independent sales force. We generally experience seasonality in the Investment and Savings Products segment results due to our high concentration of sales of retirement account products. These accounts are typically funded in February through April, coincident with our clients’ tax return preparation season. While we believe the size of the independent sales force is a factor in driving sales volume in this segment, there are a number of other variables, such as economic and market conditions, which may have a significantly greater effect on sales volume in any given fiscal period.
Current wording
Sales. We earn commissions and fees, such as dealer re-allowances and marketing and distribution fees, based on sales of mutual fund products and annuities in the United States and sales of certain mutual fund products in Canada. Sales of investment and savings products are influenced by the overall demand for investment and savings products in the United States and Canada, as well as by the size and productivity of the independent sales force. We generally experience seasonality in the Investment and Savings Products segment results due to our high concentration of sales of retirement account products. These accounts are typically funded in February through April, coincident with our clients’ tax return preparation season. While we believe the size of the independent sales force is a factor in driving sales volume in this segment, there are a number of other variables, such as economic and market conditions, which may have a significantly greater effect on sales volume in any given fiscal period.
Previous wording
The Corporate and Other Distributed Products segment also includes corporate income and expenses not allocated to our other segments, general and administrative expenses (other than expenses that are allocated to the Term Life Insurance, Investment and Savings Products, or Senior Health segments), interest expense on notes payable, redundant reserve financing transactions and our revolving credit facility (“Revolving Credit Facility”), as well as realized gains and losses on our invested asset portfolio.
Current wording
The Corporate and Other Distributed Products segment also includes corporate income and expenses not allocated to our other segments, general and administrative expenses (other than expenses that are allocated to the Term Life Insurance and Investment and Savings Products segments), interest expense on notes payable, a redundant reserve financing transaction and our revolving credit facility (“Revolving Credit Facility”), as well as realized gains and losses on our invested asset portfolio.
Previous wording
Capital Structure. Our financial results are affected by our capital structure, which includes our senior unsecured notes (the “Senior Notes”), redundant reserve financing transactions, our Revolving Credit Facility, and our common stock. See Note 11 (Debt), Note 13 (Stockholders’ Equity) and Note 17 (Commitments and Contingent Liabilities) to our consolidated financial statements included elsewhere in this report for more information on changes in our capital structure.
Current wording
Capital Structure. Our financial results are affected by our capital structure, which includes our senior unsecured notes (the “Senior Notes”), a redundant reserve financing transaction, our Revolving Credit Facility, and our common stock. See Note 12 (Debt), Note 14 (Stockholders’ Equity) and Note 18 (Commitments and Contingent Liabilities) to our consolidated financial statements included elsewhere in this report for more information on changes in our capital structure.
Previous wording
The year-end exchange rates (U.S. dollar per Canadian dollar) used by the Company to translate our Canadian dollar functional currency assets and liabilities into U.S. dollars increased by 3% in 2023 from 2022. Also, the average exchange rates used by the Company in 2023 to translate our Canadian dollar functional currency revenues and expenses into U.S. dollars decreased 4% compared to 2022. The 2022 year-end exchange rates decreased by 7% from 2021 and the average exchange rates decreased 4% compared to 2021.
Current wording
The year-end exchange rates (U.S. dollar per Canadian dollar) used by the Company to translate our Canadian dollar functional currency assets and liabilities into U.S. dollars decreased by 8% in 2024 from 2023. Also, the average exchange rates used by the Company in 2024 to translate our Canadian dollar functional currency revenues and expenses into U.S. dollars decreased 1% compared to 2023. The 2023 year-end exchange rates increased by 3% from 2022 and the average exchange rates decreased 4% compared to 2022.
Previous wording
The estimates that we deem to be most critical to an understanding of our results of operations and financial position are those related to DAC, future policy benefit reserves and corresponding amounts recoverable from reinsurers, income taxes, renewal commissions receivable, goodwill and the valuation of investments. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. Subsequent experience or use of other assumptions could produce significantly different results.
Current wording
The estimates that we deem to be most critical to an understanding of our results of operations and financial position are those related to DAC, future policy benefit reserves and corresponding amounts recoverable from reinsurers, income taxes, and the valuation of investments. The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. Subsequent experience or use of other assumptions could produce significantly different results.
Previous wording
Assumptions of face amounts used to amortize DAC for term life policies, including persistency and mortality, are consistent with the assumptions used in estimating the LFPB. Changes in persistency would have the most notable impact on DAC amortization; however, the differences primarily affect DAC amortization on a go-forward basis. If annual lapse rate assumptions at each policy duration were 5% higher during 2023, we would have recognized approximately $9 million of additional amortization of DAC expense for 2023, before the impact of tax, and the rate of DAC amortization would increase in future years. Conversely, if annual lapse rate assumptions were 5% lower during 2023, we would have recognized approximately $9 million of lower DAC amortization for 2023, before the impact of tax, and the rate of DAC amortization would decrease in future years. We believe that a plus or minus 5% annual lapse rate change is a reasonably possible variation. Changes in persistency assumptions also impact the balance of future policy benefit reserves and reinsurance recoverables as discussed below.
Current wording
Assumptions of face amounts used to amortize DAC for term life policies, including persistency and mortality, are consistent with the assumptions used in estimating the LFPB. Changes in persistency would have the most notable impact on DAC amortization; however, the differences primarily affect DAC amortization on a go-forward basis. If annual lapse rate assumptions at each policy duration were 5% higher during 2024, we would have recognized approximately $10 million of additional amortization of DAC expense for 2024, before the impact of tax, and the rate of DAC amortization would increase in future years. Conversely, if annual lapse rate assumptions were 5% lower during 2024, we would have recognized approximately $10 million of lower DAC amortization for 2024, before the impact of tax, and the rate of DAC amortization would decrease in future years. We believe that a plus or minus 5% annual lapse rate change is a reasonably possible variation. Changes in persistency assumptions also impact the balance of future policy benefit reserves and reinsurance recoverables as discussed below.
Previous wording
The Company uses discount rates applied by country to align with local currency cash flows. Discount rates consist of yield curves that are developed using Bloomberg’s Evaluated Pricing Product based on senior unsecured fixed rate bonds ratings of A+, A, or A-. The discount rate assumption is updated quarterly, and the impact of remeasuring the net LFPB, after reinsurance recoverables from changes in the locked-in discount rate assumption is reflected in other comprehensive income in the consolidated statements of comprehensive income.
Current wording
The Company uses discount rates applied by country to align with local currency cash flows. Discount rates consist of yield curves that are developed using Bloomberg’s Evaluated Pricing Product based on senior unsecured fixed rate bonds ratings of A+, A, or A-. The discount rate assumption is updated quarterly, and the impact of remeasuring the net LFPB, after reinsurance recoverables from changes in the locked-in discount rate assumption is reflected in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss).
Previous wording
(2) Changes in discount rate affect the effect of change in discount rate assumptions on the liability for future policy benefits on the consolidated statements of comprehensive income. Estimated impacts show the (decrease) / increase in accumulated other comprehensive income before income taxes. The assumption change is based on a parallel shift in the discount rate curve.
Current wording
(2) Changes in discount rate affect the effect of change in discount rate assumptions on the liability for future policy benefits on the consolidated statements of comprehensive income (loss). Estimated impacts show the (decrease) / increase in accumulated other comprehensive income (loss) before income taxes. The assumption change is based on a parallel shift in the discount rate curve.
Previous wording
For additional information on future policy benefits, reinsurance and the impact to accumulated other comprehensive income see Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies), Note 6 (Reinsurance), and Note 10 (Future Policy Benefits) to our consolidated financial statements included elsewhere in this report.
Current wording
For additional information on future policy benefits, reinsurance and the impact to accumulated other comprehensive income (loss) see Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies), Note 7 (Reinsurance), and Note 11 (Future Policy Benefits) to our consolidated financial statements included elsewhere in this report.
Previous wording
Invested Assets. We hold primarily fixed-maturity securities, including bonds and redeemable preferred stocks. We have classified these invested assets as available-for-sale, except for the securities of our U.S. broker-dealer subsidiaries, which we have classified as trading securities. We also hold a credit-enhanced note, which we classified as a held-to-maturity security that was issued in exchange for a surplus note (the “Surplus Note”) with an equal principal amount as part of a redundant reserve financing transaction. All of these securities are carried at fair value, except for the held-to-maturity security, which is carried at amortized cost. Unrealized gains and losses on available-for-sale securities are included as a separate component of other comprehensive income in our consolidated statements of comprehensive income.
Current wording
Invested Assets. We hold primarily fixed-maturity securities, including bonds and redeemable preferred stocks. We have classified these invested assets as available-for-sale, except for the securities of our U.S. broker-dealer subsidiaries, which we have classified as trading securities. We also hold a credit-enhanced note, which we classified as a held-to-maturity security that was issued in exchange for a surplus note (the “Surplus Note”) with an equal principal amount as part of a redundant reserve financing transaction. All of these securities are carried at fair value, except for the held-to-maturity security, which is carried at amortized cost. Unrealized gains and losses on available-for-sale securities are included as a separate component of other comprehensive income (loss) in our consolidated statements of comprehensive income (loss).
Previous wording
Commissions and fees. Consists primarily of dealer re-allowances earned on the sales of investment and savings products, trail commissions and management fees based on the asset values of client accounts, marketing and distribution fees from product originators, fees for non-bank custodial services rendered in our capacity as nominee on client retirement accounts funded by mutual funds on our servicing platform, transfer agent recordkeeping fees for mutual funds on our servicing platform, and fees associated with the sale of other distributed products. Also consists of commissions and fees earned from the distribution of Medicare-related insurance products on behalf of health insurance carriers.
Current wording
Commissions and fees. Consists primarily of dealer re-allowances earned on the sales of investment and savings products, trail commissions and management fees based on the asset values of client accounts, marketing and distribution fees from product originators, fees for non-bank custodial services rendered in our capacity as nominee on client retirement accounts funded by mutual funds on our servicing platform, transfer agent recordkeeping fees for mutual funds on our servicing platform, and fees associated with the sale of other distributed products.
Previous wording
Other, net. Reflects revenues generated from the fees charged for access to Primerica Online (“POL”), our primary sales force support tool, marketing development revenue received from health insurance carriers, as well as revenues from the sale of other miscellaneous items.
Current wording
Other, net. Reflects revenues generated from the fees charged for access to Primerica Online (“POL”), our primary independent sales force support tool, as well as revenues from the sale of other miscellaneous items.
Previous wording
Sales commissions. Represents commissions to the sales representatives in connection with the sale of investment and savings products, and products other than insurance products.
Current wording
Sales commissions. Represents commissions to the independent sales representatives in connection with the sale of investment and savings products, and products other than insurance products.
Previous wording
Interest expense. Reflects interest on our notes payable, any interest and the commitment fee on our Revolving Credit Facility, the financing charges related to the letter of credit issued under the credit facility agreement with Deutsche Bank, fees paid for the credit enhancement feature on our held-to-maturity invested asset, and a finance charge incurred pursuant to one of our coinsurance agreements with an IPO coinsurer.
Current wording
Interest expense. Reflects interest on our note payable, any interest and the commitment fee on our Revolving Credit Facility, fees paid for the credit enhancement feature on our held-to-maturity invested asset, and a finance charge incurred pursuant to one of our coinsurance agreements with an IPO coinsurer.
Previous wording
Other operating expenses. Consists primarily of expenses that are unrelated to the distribution of life insurance products, including staff compensation, technology and communications, various sales force-related costs, non-bank custodial and transfer agent recordkeeping administrative costs, outsourcing and professional fees, and other corporate and administrative fees and expenses.
Current wording
Other operating expenses. Consists primarily of staff compensation, technology and communications, various independent sales force-related costs, non-bank custodial and transfer agent recordkeeping administrative costs, outsourcing and professional fees, and other corporate and administrative fees and expenses.
Previous wording
Insurance expenses and other operating expenses directly attributable to the Term Life Insurance, Investment and Savings Products and Senior Health segments are recorded directly to the applicable segment. We allocate certain other revenue and operating expenses that are not directly attributable to a specific operating segment using methods expected to reasonably measure the benefit received by each reporting segment. Such methods include time studies, recorded usage, revenue distribution, and sales force representative distribution. These allocated items include fees charged for access to POL and costs incurred for technology, sales force support, occupancy and other general and administrative costs. Costs that are not directly charged or allocated to our three primary operating segments are included in the Corporate and Other Distributed Products segment.
Current wording
Insurance expenses and other operating expenses directly attributable to the Term Life Insurance and Investment and Savings Products segments are recorded directly to the applicable segment. We allocate certain other revenue and operating expenses that are not directly attributable to a specific operating segment using methods expected to reasonably measure the benefit received by each reporting segment. Such methods include time studies, recorded usage, revenue distribution, and independent sales force representative distribution. These allocated items include fees charged for access to POL and costs incurred for technology, independent sales force support, occupancy and other general and administrative costs. Costs that are not directly charged or allocated to our two primary operating segments are included in the Corporate and Other Distributed Products segment.
Previous wording
Total revenues. Total revenues increased in 2023 from 2022 due to increases in net premiums earned in our Term Life Insurance segment, asset-based commissions and fees earned in our Investment and Savings Products segment, and net investment income earned by our invested asset portfolio. Partially offsetting these increases in total revenues were lower sales-based commissions and fees earned in our Investment and Savings Products segment. These movements are further discussed in detail in the Segment Results sections below.
Current wording
Total revenues. Total revenues increased in 2023 from 2022 due to increases in net premiums earned in our Term Life Insurance segment, asset-based commissions and fees earned in our Investment and Savings Products segment, and net investment income earned in our Corporate and Other Distributed Products segment. Partially offsetting these increases in total revenues were lower sales-based commissions and fees earned in our Investment and Savings Products segment. These movements are further discussed in detail in the Segment Results sections below.
Previous wording
Total benefits and expenses. Total benefits and expenses decreased in 2023 from 2022 largely due to a non-cash goodwill impairment charge of $60.0 million recorded in our Senior Health segment during 2022, lower sales-based commissions expenses in our Investment and Savings Products segment, and lower contract acquisition costs in our Senior Health segment. Partially offsetting the decrease in total benefits and expenses were increases in asset-based sales commissions expenses in our Investment and Savings Products segment, amortization of DAC, and other operating expenses during 2023. The increase in other operating expenses was due to increased technology spending as well as higher employee-related and growth-related costs. These movements are discussed in further detail in the Segment Results section below.
Current wording
Total benefits and expenses. Total benefits and expenses increased in 2023 from 2022 primarily due to increases in asset-based sales commissions expenses in our Investment and Savings Products segment, amortization of DAC, and other operating expenses during 2023. The increase in other operating expenses was due to increased technology spending as well as higher employee-related and growth-related costs. Partially offsetting these increases were lower sales-based commissions expenses in our Investment and Savings Products segment. These movements are discussed in further detail in the Segment Results section below.
Showing the first 40 of 68 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Ending client asset values increased in 2023 from 2022 primarily due to the difference in market performance during each respective year. Net flows remained positive during 2023 but were lower than net flows in 2022.
Current report — wording carried from elsewhere
to our consolidated financial statements included elsewhere in this report. These movements are further discussed in detail in the Segment Results sections below.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
LFPB adjusts both expected net premiums and expected future policy benefits and spreads any variances over the remaining contract period.
Previous report — wording carried elsewhere
Net investment income increased in 2022 from 2021 due to $9.0 million from higher yields in the invested asset portfolio and $5.4 million from a larger invested asset portfolio compared to the prior year. As noted above, investment income net of investment expenses includes interest earned on our held-to-maturity asset, which is offset by interest expense on the Surplus Note, thereby eliminating any impact on net investment income.
Previous report — wording carried elsewhere
Future policy benefits remeasurement (gain) loss. Future policy benefits remeasurement (gain) loss was generally flat during 2023 compared to 2022 and represent differences in experience variances that occurred in each respective period. The portion of experience variances recognized in net income during each period will increase as we move further away from the Transition Date of LDTI.
Previous report — wording carried elsewhere
Total revenues. Total revenues increased in 2023 from 2022 primarily due to higher net investment income. Net investment income increased due to the factors described in “Primerica, Inc. and Subsidiaries Results” above. This increase was partially offset by a year-over-year decline in revenue from commissions and fees and investment gains (losses). Commissions and fees revenue earned from our mortgage distribution product offerings were lower during 2023 compared to 2022 primarily attributable to higher mortgage interest rates that reduced demand for mortgage products. The change in investment gains (losses) is discussed in the “Primerica, Inc. and Subsidiaries Results” section above.