Primerica, Inc. (NYSE:PRI) Q4 2015 Earnings Conference Call - Final Transcript

Feb 11, 2016 • 10:00 am ET

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Primerica, Inc. (NYSE:PRI) Q4 2015 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good morning and welcome to the Primerica Fourth Quarter Financial Results Conference Call. All participants will be in listen only mode. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Kathryn Kieser, Executive Vice President of Investor Relations. Please go ahead.

Executive
Kathryn Kieser

Good morning, everyone. Welcome to Primerica's fourth quarter earnings call. A copy of our earnings release, financial supplement, presentation, and the webcast of today's call are available on our website at investors.primerica.com. Glenn Williams, our Chief Executive Officer and Alison Rand, our Chief Financial Officer, will deliver prepared remarks, then we'll open it up for questions.

We reference certain non-GAAP financial measures in our press release and on this call. These non-GAAP measures have limitations and reconciliations between non-GAAP and GAAP financial measures are attached to our press release.

We will also make forward-looking statements in accordance with the Safe Harbor provisions of the Securities Litigation Reform Act. The company will not revise or update these statements to reflect new information, subsequent events or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from these expressed or implied are discussed in the company's 2014 Annual Report on Form 10-K, as updated quarterly by our reports on Form 10-Q.

Now, I'll turn it over to Glenn.

Executive
Glenn Williams

Thank you, Kathryn, and good morning, everyone. In 2015, Primerica had its strong year of distribution growth since becoming a public company in 2010. We delivered record ROAE and operating EPS by successfully executing our strategy to drive organic growth, while actively repurchasing shares of Primerica's common stock.

Beginning on Slide 3, you can see operating revenues for the full-year 2015 increased 5% to $1.41 billion, driven by 11% growth in Term Life adjusted direct premiums and a 14% increase in Term Life operating income before income taxes. Investment and Savings Products sales and client asset values were slightly higher, while ISP operating income before income taxes remain consistent year-over-year.

Total net operating income grew 5% to $191.1 million due to business growth with a modest 3% increase in insurance and other operating expenses in 2015. The weakening of the Canadian dollar during 2015 negatively impacted net operating income by approximately $7 million. And net investment income continue to experience downward pressure in 2015, primarily due to market conditions, lower yield on invested assets, and continued share repurchases throughout the year.

Net operating earnings per diluted share increased 12% to $3.72, and ROAE increased 160 basis points to 16.9% compared to 2014. In 2016, we expect ROAE to continue to increase to around 18% for the full-year. During 2015, we increased share repurchases by $50 million to $200 million, enabling the retirement of approximately 8% of common stock outstanding as of December 31, 2014. We increased quarterly shareholder dividends by 33% from 2014.

In aggregate, we've returned over 100% of operating earnings to stockholders in 2015. We