Here's Why Should You Stay Invested in Primerica (PRI)

Primerica, Inc.’s PRI compelling portfolio, strong market presence, solid capital position and favorable growth estimates make it worth retaining in one’s portfolio.

Zacks Rank & Price Performance

Primerica currently carries a Zacks Rank #3 (Hold). Year to date, the stock has lost 18.9%, compared with the industry’s decline of 9.1%.

Image Source: Zacks Investment Research

Northbound Estimate Revision

The Zacks Consensus Estimate for 2023 has moved 1 cent north in the past 30 days, reflecting analyst optimism.

Growth Projections

The Zacks Consensus Estimate for Primerica’s 2023 earnings is pegged at $13.84, indicating a 22.7% increase from the year-ago reported figure on 6.2% higher revenues of $2.9 billion.

Growth Drivers

Primerica is the second-largest issuer of term-life insurance coverage in North America, with $900 billion policies in force in 2022. Strong demand for protection products should drive sales growth and policy persistency. PRI’s strong business model makes it well poised to cater to the middle market's increased demand for financial security. This, in turn, should continue to boost operational performance.

PRI estimates adjusted direct premium at Term Life, its biggest segment, to increase 7% in the third quarter of 2022 while sales in the second half are expected to grow 4-5%.  

However, given market volatility, PRI expects third-quarter ISP sales to decline in the mid-20% range, asset-based net revenues to decline about $3 million and sales-based net revenues to decline about $10 million year over year.

Licensed representatives play a major role in driving operational results for PRI. The insurer thus remains focused on growing licensed representatives.

With the U.S. mortgage distribution business gaining traction, Primerica remains focused on expanding distribution. However, given an improving interest rate environment, PRI expects growth to be muted in this segment.

However, PRI projects insurance and other operating expenses to increase 8% and 6%, respectively, in the third and fourth quarters of 2022.

The insurer had solid liquidity with cash and cash equivalents of $400 million at second-quarter 2022 end. Primerica Life Insurance Company’s statutory risk-based capital ratio was about 460% as of Jun 30, 2022.

Primerica has been strengthening its balance sheet by improving its leverage ratio. PRI scores strongly with credit rating agencies.

Banking on the continued solid performance of Term Life and ISP businesses, Primerica boasts an impressive dividend history. It has hiked dividends 10 times in the last nine years. Primerica looks to buy back $356 million worth of shares in 2022. PRI expects the Term Life business to be the primary source of deployable capital

The company has a VGM Score of B.

Stocks to Consider

Some better-ranked stocks from the industry are Reinsurance Group of America RGA, Brighthouse Financial BHF and Voya Financial VOYA.

Reinsurance Group delivered an earnings surprise of 112.5% in the last reported quarter.  Year to date, the insurer has rallied 13.9%.  RGA sports Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for RGA’s 2022 and 2023 earnings implies a respective increase of 1,057% and 20.5% from the year-ago reported number.

Brighthouse Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 42.34%. Year to date, Brighthouse Financial has lost 15.4%.

The Zacks Consensus Estimate for BHF’s 2022 and 2023 earnings has moved 17.3% and 3.6% north, respectively, in the past 30 days.

The bottom line of Voya surpassed earnings estimates in three of the last four quarters and missed in one, the average being 10.81%. Year to date, the insurer has lost 8.1%.

The Zacks Consensus Estimate for Voya’s 2022 and 2023 earnings has moved 3.4% and 0.7% north, respectively, in the past 30 days.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.