Primerica Profile
Primerica, Inc. provides financial products to middle-income households in the United States and Canada.
As of December 31, 2022, the company had 135,208 life insurance-licensed sales representatives. The company insured over 5.7 million lives and had approximately 2.8 million client investment accounts as of December 31, 2022.
Segments
The company operates through four segments, including Term Life Insurance; Investment and Savings Products; Senior Health; and Corporate and Other Distributed Products.
Term Life Insurance segment
This segment, through its three life insurance subsidiaries – Primerica Life Insurance Company (Primerica Life), National Benefit Life Insurance Company (NBLIC) and Primerica Life Insurance Company of Canada (Primerica Life Canada), offers term life insurance to clients in the United States, its territories, the District of Columbia and Canada. Term life insurance provides a guaranteed death benefit if the insured dies during the fixed coverage period of an in-force policy, thereby providing financial protection for named beneficiaries in return for the periodic payment of premiums. Term insurance products, which are sometimes referred to as pure protection products, have no savings or investment features.
The company designs its term life insurance products to be easily understood by, and meet the needs of, its clients. Clients purchasing the company’s term life insurance products generally seek stable, longer-term income protection products for themselves and their families. In response to this demand, the company offers term life insurance products with initial level-premium coverage periods that range from 10 to 35 years and a wide range of coverage face amounts. Policies remain in force until expiration or until the policyholder ceases to make premium payments and terminates the policy. The company’s in-force term life insurance policies have level premiums for the stated term period.
In October 2022, the company introduced its new generation of life insurance products. The Primerica PowerTerm (PowerTerm) product is its rapid issue term life product. PowerTerm allows an independent sales representative to submit an application via TurboApps, during which the company accesses databases, including Medical Information Bureau (MIB) data in the United States and Canada and prescription drug, clinical lab, motor vehicle, and criminal records in the United States, as part of the underwriting process.
The company also introduced its new Primerica PrecisionTerm (PrecisionTerm) product, which is its traditionally underwritten term insurance product. PrecisionTerm allows an independent sales representative to submit an application via TurboApps. The company then utilizes the underwriting techniques described above combined with modeling to eliminate paramedical testing requirements for certain applicants. The remaining applicants are required to undergo traditional paramedical testing requirements to complete the underwriting process.
Claims Management: The company’s insurance subsidiaries processed over 19,200 life insurance benefit claims in 2022 on policies underwritten by it and sold by independent sales representatives. These claims fall into three categories: death, waiver of premium, or terminal illness. During the COVID-19 pandemic, the company experienced elevated claims due to the premature deaths of its insureds. Beginning in early 2022, the company experienced fewer COVID-19 related claims than during the height of the pandemic.
Investment and Savings Products segment
This segment product offerings include saving and investment vehicles that seek to meet the needs of clients in all stages of life. Through Primerica Financial Services, LLC (PFS), PFS Investments Inc. (PFS Investments), Primerica Life Canada, PFSL Investments Canada Ltd. (PFSL Investments Canada), and licensed sales representatives, the company distributes and sells to its clients a variety of mutual funds, managed investments, variable, index-linked, and fixed annuities, fixed indexed annuities and segregated funds. As of December 31, 2022, approximately 26,186 sales representatives were licensed to distribute mutual funds in the United States (including Puerto Rico) and Canada. As of December 31, 2022, approximately 13,666 sales representatives were licensed and appointed to distribute annuities in the United States and approximately 10,542 sales representatives were licensed to sell segregated funds in Canada.
Mutual Funds: In the United States, licensed sales representatives distribute mutual funds from selected asset management firms that are on the company’s proprietary platform. The selected firms have diversified product offerings, including domestic and international equity, fixed-income and money market funds. Each firm continually evaluates its fund offerings and adds new funds on a regular basis. Additionally, their product offerings reflect diversified asset classes and varied investment styles. These selected asset management firms provide funds that meet the investment needs of the company’s clients.
During 2022, Franklin Templeton Investments (the U.S. and Canada), Invesco, American Funds (the U.S.) and Fidelity Investments (the U.S. and Canada) collectively accounted for approximately 98% of the company’s mutual fund sales in the United States. Franklin Templeton Investments (the U.S. and Canada) and Invesco (the U.S. and Canada) each have large wholesaling teams that support the sales force in distributing their mutual fund products.
A wholly owned indirect subsidiary of the company and affiliate of PFS Investments, Primerica Shareholder Services, Inc. (PSS), provides transfer agent recordkeeping services to investors who purchase shares of mutual funds offered by certain of its fund families through PFS Investments. In exchange for these services, PSS receives recordkeeping and account maintenance fees from the applicable fund company. PSS has retained BNY Mellon Asset Servicing to perform the necessary transfer agent recordkeeping services for these accounts on its proprietary SuRPAS system. PFS Investments serves as the Internal Revenue Service (IRS) approved non-bank custodian for customers that open individual retirement accounts (IRAs) (or certain other retirement accounts) with PFS Investments and invest in shares of mutual funds offered by certain of the company’s fund families. For these services, PFS Investments receives an annual custodian fee.
As a result of Canadian regulatory changes, in July 2022 PFSL Investments Canada's services became focused on acting as the exclusive principal distributor for two families of mutual funds (the PD Funds) that are managed by well-established, unrelated investment fund managers. The PD Funds are: The AGF Platform Funds, which consist of a range of mutual funds managed by AGF Investments Inc. (AGF); and the Mackenzie FuturePath Funds, which consist of a range of mutual funds managed by Mackenzie Financial Corporation.
PFSL Investments Canada has an exclusive right to distribute the PD Funds and, as a principal distributor, it markets the PD Funds through its representatives. PFSL Investments Canada representatives no longer recommend other mutual funds (the Legacy Canada Mutual Funds) that were previously available for purchase through PFSL Investments Canada. Like the company’s U.S. fund family, the PD Funds asset management partners it has chosen in Canada have a diversified offering of equity, fixed-income and money market funds, including domestic and international funds with a variety of investment styles. The regulatory changes continue to be examined by Canadian regulators and may be modified.
In addition to the PD Funds, under limited circumstances, PFSL Investments Canada can offer investments in the Legacy Canada Mutual Funds, which include the Primerica-branded Concert Series funds and other non-proprietary funds. These limited circumstances primarily consist of pre-authorized purchases made pursuant to a systemic investment plan for existing clients. The company’s Concert Series funds consist of five different asset allocation funds and a money market fund with varying investment objectives. Each Concert Series fund is a money market fund and a fund of funds that allocates fund assets among equity, income and money market mutual funds of AGF. The asset allocation within each Concert Series fund is determined on an advisory contract basis by LifeWorks Investment Management Ltd.
During the year ended December 31, 2022, average client assets held in individual retirement accounts in the United States and Canada accounted for an estimated 73% and 65% of total average client account assets, respectively. The Canadian counterpart to the company’s IRAs are Registered Retirement Savings Plans (RRSPs). RRSPs and IRAs behave similarly, providing tax advantaged treatment and enabling clients to earn income on a tax-deferred basis.
Managed Investments: PFS Investments (doing business as PFS Advisors) is a registered investment advisor in the United States, and it offers a managed investments program, Primerica Advisors Lifetime Investment Platform (the Lifetime Investment Platform), which the company launched in 2017. The Lifetime Investment Platform is a robust advisory offering designed for clients who have at least $25,000 of investable assets. It provides its customers access to mutual fund and exchange-traded fund investment models designed and managed by several unaffiliated investment advisers. PFS Investments, as sponsor and portfolio manager of the program, evaluates models for inclusion in the program and conducts ongoing due diligence of the models and unaffiliated investment advisers made available through the program. As of December 31, 2022, the company used 11 unaffiliated investment advisers. TD Ameritrade Institutional, an unaffiliated broker-dealer, provides custody, trade execution, clearing, settlement and other services for customer assets invested through the Lifetime Investment Platform.
Variable Annuities: The U.S. securities licensed sales representatives also distribute variable annuities issued by American General Life Insurance Company and its affiliates (Corebridge), Equitable Financial Life Insurance Company (Equitable Life), Lincoln National Life Insurance Company and its affiliates (Lincoln National), and Brighthouse Life Insurance Company (Brighthouse Life). Variable annuities are insurance products that enable the company’s clients to invest in accounts with attributes similar to mutual funds, but also have benefits not found in mutual funds, including death benefits that protect beneficiaries from losses due to a market downturn and income benefits that guarantee future income payments for the life of the policyholder(s). The company also offers index-linked annuities issued by Equitable Life, Brighthouse Life, and Lincoln National. Index-linked annuities are insurance contracts that provide investors with potential growth, subject to a cap, and partial downside protection against losses.
Fixed Indexed Annuities: The company offers fixed indexed annuity products in the U.S. through Lincoln National, Corebridge, and Universal Life Insurance Company (Universal Life) (Puerto Rico). These products combine safety of principal and guaranteed rates of return with additional investment options tied to equity market indices that allow for returns that move based on the performance of an index.
Fixed Annuities: In Puerto Rico, the company offers two annuity products: a fixed annuity and a fixed bonus annuity underwritten by Universal Life. These products provide guarantees against loss with several income options.
Employer-Sponsored Retirement Plans: In the United States, the company also offers Employer Sponsored Retirement Plans (ESRP), such as 401(k) plans, primarily to small and medium-sized businesses. The ESRPs the company distributes are offered by a limited number of third-party providers, including American Funds Distributors, Inc.; Equitable Distributors, LLC; and VOYA Financial, Inc., which together account for most of its ESRP business. In addition, the company distributes 457(b) plans to governmental entities. The company’s licensed representatives generally provide educational and administrative services with respect to ESRPs, which includes helping its ESRP clients understand the benefits of offering a tax-deferred retirement plan and assisting their employees to realize the need to save for retirement and the benefits of doing so in an ESRP.
Segregated Funds: In Canada, the company offers segregated fund products, branded as its Common Sense Funds, that have some of the characteristics of its variable annuity products distributed in the United States. The company’s Common Sense Funds are underwritten by Primerica Life Canada and offer its clients the ability to participate in a diversified managed investments program that can be opened for as little as $25.
Investment and Savings Products Revenue: In the United States, the company earns revenue from its Investment and Savings Products business in three ways: up front commissions and payments earned on the sale of such products; trailing fees and payments earned based upon client asset values; and account-based revenue. On the sale of mutual funds (not including managed investments) and annuities, the company earns a dealer re-allowance or commission on new purchases as well as trail commissions on the assets held in its clients’ accounts. The company also receives marketing and distribution fees from most of its mutual fund and annuity providers. For investments into the Lifetime Investment Platform, the company receives an asset-based fee as compensation for the investment advisory and other administrative services it provides.
Senior Health segment
In the United States, e-TeleQuote Insurance, Inc. (e-TeleQuote) distributes Medicare-related insurance products to eligible Medicare participants. These products consist of Medicare Advantage Plans and Medicare Supplement Plans. Medicare Advantage Plans are insurance policies offered by private health insurance carriers approved by Centers for Medicare and Medicaid Services (CMS). These policies are fully funded by the federal government and managed by private health insurance carriers. They cover hospital care, outpatient medical services and, in some cases, additional coverage for prescription drugs, vision, hearing and dental. Medicare Supplement Plans provide additional insurance to help pay for costs not covered by Medicare, such as copayments, coinsurance, deductibles and coverage for travel outside of the United States. Medicare Supplement Plans are private health insurance without any Medicare subsidy. During 2022, United Healthcare Group, Inc.; Humana, Inc.; and Anthem, Inc. accounted for the majority of the Senior Health segment commissions revenues.
Other Distributed Products segment
In the United States, this segment distributes other products, including mortgage loans through mortgage-licensed loan originators, prepaid legal services, auto and homeowners’ insurance referrals, and home automation solutions. In Canada, this segment offers mortgage loan referrals, auto and homeowners’ insurance referrals, and insurance offerings for small businesses. While some of these products are Primerica-branded, all of them are underwritten or otherwise provided by a third party.
The company has a contractual arrangement with Rocket Mortgage, LLC. (Rocket Mortgage), a mortgage lender, whereby Primerica Mortgage, LLC (Primerica Mortgage), a state-licensed mortgage broker, offers mortgage loans through its mortgage loan originator licensed representatives. The company offers refinance mortgages and purchase-money mortgages. In 2022, the company continued to expand its mortgage program into new states. The company receives compensation from Rocket Mortgage for each closed loan based on a fixed percentage of the loan amount (subject to regulatory maximums) for mortgage brokering services provided and pay compensation to the representatives for services rendered.
In November 2022, the company launched a pilot program with Spring EQ LLC, a mortgage lender, whereby Primerica Mortgage offers second mortgages and home equity lines of credit through its mortgage loan originator licensed representatives.
The company offers its U.S. and Canadian clients a Primerica-branded prepaid legal services program on a subscription basis that is underwritten and provided by Pre-Paid Legal Services, Inc. The prepaid legal services program offers a network of attorneys in each state, province or territory to assist subscribers with legal matters, such as drafting wills, living wills and powers of attorney, trial defense and motor vehicle-related matters. The company receives a commission based on sales and renewals of these subscriptions.
The company has a contractual arrangement with Answer Financial, Inc. (Answer Financial), an independent insurance agency, whereby the U.S. sales representatives refer clients to Answer Financial to receive multiple, competitive auto and homeowners’ insurance quotes. Answer Financial’s comparative quote process allows clients to easily identify the underwriter that is most competitively priced for their type of risk. The company receives commissions based on completed auto and homeowners’ placement of insurance and policy renewals and pay independent sales representatives a flat referral fee for each completed application and policy renewal.
The company has a contractual arrangement with Vivint, Inc. (Vivint), a company that offers homeowners in the U.S. a comprehensive suite of products and services to protect and remotely control, monitor and manage their homes using any Internet-connected smart device. The company receives commissions based on referrals that result in a subscription to Vivint’s home services and pay sales representatives a referral fee for each such subscription.
In the Canadian provinces of Alberta, Ontario and British Columbia (with respect to homeowners’ insurance only), the company has an arrangement with SurexDirect.com Ltd. (Surex Direct), an independent insurance agency, whereby sales representatives refer clients to Surex Direct to receive multiple, competitive auto and homeowners’ insurance quotes. Surex Direct’s comparative quote process allows clients to easily identify the underwriter that is most competitively priced for their type of risk. The company receives referrals based on completed auto and homeowners’ placement of insurance and policy renewals and pay sales representatives a flat referral fee for each completed application and policy renewal.
In Canada, the company has a referral program for mortgage loan products offered by third-party lenders Rocket Mortgage Canada ULC and 8Twelve Mortgage Corp. Due to regulatory requirements, sales representatives in Canada only refer clients to the lender and are not involved in the loan application and closing process. The company receives referral fees based on the funded loan amount and, in turn, pay a commission to independent sales representatives.
In Canada, the company offers insurance products, including supplemental medical and dental, accidental death, and disability, to small businesses. These insurance products are underwritten and provided by The Edge Benefits Inc. and its affiliates. The company receives a commission based on sales and renewals of these policies.
Regulation
Insurance Business
Primerica Life, as a Tennessee-domiciled insurer, is regulated by the Tennessee Department of Commerce and Insurance and is licensed to transact business in the United States (except New York), the District of Columbia and certain U.S. territories. NBLIC, as a New York-domiciled life insurance underwriting company and a wholly owned subsidiary of Primerica Life, is regulated by the New York State Department of Financial Services (NYDFS) and is licensed to transact business in all 50 U.S. states, the District of Columbia and the U.S. Virgin Islands.
The company’s U.S. insurance subsidiaries are required to file certain annual, quarterly and periodic reports with the supervisory agencies in the jurisdictions in which they do business, and their business and accounts are subject to examination by such agencies at any time. These examinations generally are conducted under National Association of Insurance Commissioners (NAIC) guidelines. Under the rules of these jurisdictions, insurance companies are examined periodically (generally every three to five years) by one or more of the supervisory agencies on behalf of the states in which they do business. The company’s most recent examinations of the financial condition and affairs of Primerica Life and NBLIC, as well as Peach Re, Inc. (Peach Re) and Vidalia Re, Inc. (Vidalia Re), special purpose financial captive insurance companies and wholly owned subsidiaries of Primerica Life, performed by the respective domiciliary state insurance department at the time of the exams, were completed during 2021 with no material findings or recommendations noted.
Primerica Life Canada is federally incorporated and provincially licensed and is required to file periodic reports with Canadian regulatory agencies. It transacts business in all Canadian provinces and territories. Primerica Life Canada is regulated federally by the Office of the Superintendent of Financial Institutions Canada (OSFI) and provincially by the Superintendents of Insurance for each province and territory. Canadian federal and provincial insurance laws regulate all aspects of the company’s Canadian insurance business.
Primerica Life Canada files quarterly and annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and other locally accepted standards with OSFI in compliance with legal and regulatory requirements. In addition to federal and provincial oversight, Primerica Life Canada is subject to the guidelines set out by the Canadian Life and Health Insurance Association (CLHIA).
Investment and Savings Products Business
PFS Investments is registered with, and regulated by, the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC). It is subject to regulation by the Department of Labor (DOL) with respect to certain retirement plans, and by state securities agencies. PFS Investments operates as an introducing broker-dealer, which does not hold client accounts, and is also registered in all 50 U.S. states and certain territories.
PFS Investments is required to file monthly reports, as well as annual audited financial statements with the SEC pursuant to Section 17 of the Securities Exchange Act of 1934, as amended (the Exchange Act), and Rule 17a-5 thereunder. As part of filing these reports, PFS Investments is subject to minimum net capital requirements, as mandated by Rule 15c3-1 of the Exchange Act.
PFS Investments is also approved as a non-bank custodian under IRS regulations. In addition, PFS Investments is an SEC-registered investment advisor and, under the name Primerica Advisors, offers managed investment programs. In most states, independent sales representatives are required to obtain an additional license to offer these programs.
PSS is registered with the SEC as a transfer agent and, accordingly, is subject to SEC rules and examinations. PFSL Investments Canada is a mutual fund dealer registered with and regulated by the Mutual Fund Dealers Association of Canada (the MFDA), the national self-regulatory organization for the distribution side of the Canadian mutual fund industry. It is also registered with provincial and territorial securities commissions throughout Canada (collectively referred to as the ‘Canadian Securities Administrators’ or ‘CSA’). As a registered mutual fund dealer, PFSL Investments Canada performs the suitability review of mutual fund investment recommendations, and like the company’s U.S. broker-dealer, it does not hold client accounts. PFSL Investments Canada is subject to the rules and regulations established by the Canadian Securities Administrators for the sale of securities, which include standards of conduct for the firm and its sales representatives.
PFSL Investments Canada is required to file monthly and annual financial statements and reports with the MFDA that are prepared to comply with the prescribed MFDA reporting requirements. The MFDA has established a risk adjusted capital standard for mutual fund dealers. Its formula is designed to provide advance warning of a member encountering difficulties. PFSL Fund Management in Canada is registered as an Investment Fund Manager in connection with the company’s Concert Series mutual funds and is regulated by provincial securities commissions.
PFSL Fund Management is required to file quarterly and annual financial statements with the Ontario Securities Commission (OSC) prepared to meet the requirements of National Instrument 31-103, Registration Requirements, Exemptions and Ongoing Registrant Obligations, based on the financial reporting framework specified in National Instrument 52-107, Acceptable Accounting Principles and Auditing Standards. PFSL Fund Management is required to maintain a minimum level of capital and file its quarterly and annual calculation of excess working capital with the OSC. As an investment fund manager, PFSL Fund Management is required to file periodic reports with provincial and territorial securities commissions throughout Canada for its Concert Series mutual funds. Such reports include semi-annual and annual financial statements prepared in accordance with IFRS. As the segregated funds are separate accounts of Primerica Life Canada, the segregated funds are also regulated by OSFI and included as part of the quarterly and annual financial statement filings for Primerica Life Canada. In addition, the segregated funds are subject to the guidelines set out by the CLHIA.
Senior Health Products
e-TeleQuote is subject to a number of the U.S. federal and state laws, regulations and agency guidance. These laws, regulations and guidance may involve financial services, privacy and data collection, data protection, intellectual property, competition, consumer protection, and other subjects.
e-TeleQuote has a compliance function that is accountable to state insurance regulators, health insurance carriers, and CMS at the federal level. The CMS Medicare Communication and Marketing Guidelines prescribe specific details of marketing to and interactions with Medicare beneficiaries and those soon to be Medicare eligible. e-TeleQuote digitally records all telephone calls with customers and stores them for requested retrieval by carriers or CMS in the event of any consumer inquiry or complaint.
The Health Insurance Portability and Accountability Act (HIPAA) limits the use and disclosure of certain individually identifiable health information and requires the implementation of administrative, physical and technological safeguards to protect such information. As a provider of services subject to HIPAA, the company is permitted to use and disclose certain protected health information to provide its services to existing customers and for other limited purposes, but other uses and disclosures, such as marketing communications require authorization from the applicant or must meet an exception specified in the HIPAA privacy regulations.
Mortgage Loan Products
In the United States, state mortgage banking, brokering and lending laws regulate the company’s mortgage distribution business. In the United States, Primerica Mortgage is regulated by state banking commissioners and other equivalent regulators as well as by the Consumer Financial Protection Bureau.
The company’s mortgage distribution business is subject to various other federal laws, including the Truth In Lending Act and its implementing regulation, Regulation Z, the Equal Credit Opportunity Act and its implementing regulation, Regulation B, the Fair Housing Act and the Home Ownership Equity Protection Act. The company is subject to the Real Estate Settlement Procedures Act (RESPA) and its implementing regulation, Regulation X, which requires timely disclosures related to the nature and costs of real estate settlement amounts and limits those costs and compensation to amounts reasonably related to the services performed. The company is also subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act and any implementing regulations.
Other Laws and Regulations
The Gramm-Leach-Bliley Act (GLBA) regulates the use and disclosure of certain data that the company collects from consumers, and requires it to provide consumers with notice regarding how their nonpublic personal health and financial information is used and the opportunity to ‘opt out’ of certain disclosures before sharing such information with third parties.
The Financial Consumer Agency of Canada (FCAC), a Canadian federal regulatory body, is responsible for ensuring that federally regulated financial institutions, which include Primerica Life Canada, comply with federal consumer protection laws and regulations, voluntary codes of conduct and their own public commitments. The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is Canada’s financial intelligence unit. Its mandate includes ensuring that entities subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act comply with reporting, recordkeeping and other obligations under that act. The company is also subject to privacy laws under the jurisdiction of federal and provincial privacy commissioners and the consumer complaints provisions of federal insurance laws under the mandate of the FCAC, which requires insurers to belong to a complaints ombud-service and file a copy of their complaints handling policy with the FCAC.
History
Primerica, Inc. was founded in 1927. The company was incorporated in the United States as a Delaware corporation in 2009.
