Business Context and Reporting Period
Company: Primerica, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 7, 2019
Reporting Period: Quarter ended December 31, 2018 (Fourth Quarter 2018)
This filing announces the Company's results of operations for the fourth quarter of 2018. The report includes a press release (Exhibit 99.1) and supplemental financial information (Exhibit 99.2) furnished to the SEC.
Key Financial Metrics
The provided text serves as a cover document and does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. The filing references the following metrics which are detailed in the attached exhibits:
- GAAP Measures: Standard financial results in accordance with U.S. GAAP.
- Non-GAAP Measures: Adjusted direct premiums, other ceded premiums, adjusted operating revenues, adjusted operating income before income taxes, adjusted net operating income, adjusted stockholders' equity, and diluted adjusted operating earnings per share.
Note: Specific dollar amounts and percentage changes are not present in the source text provided.
Material Changes and Non-GAAP Adjustments
The filing details specific adjustments made to non-GAAP measures to facilitate period-over-period comparisons:
- Coinsurance Transactions: Adjusted direct and ceded premiums exclude amounts ceded under IPO coinsurance transactions to reflect premiums economically maintained by the Company.
- Investment Gains/Losses: Adjusted operating measures exclude realized investment gains/losses and fair value mark-to-market (MTM) adjustments, including other-than-temporary impairments, to eliminate fluctuations not associated with core insurance operations.
- Tax Reform Impact:
- 2017: Excluded one-time transition impact of provisional amounts from the Tax Cuts and Jobs Act.
- 2018: Excluded one-time transition impact of adjustments made to finalize provisional Tax Reform amounts.
- Accounting Standard Updates (2018):
- Beginning Q1 2018, MTM adjustments on equity securities are recognized as realized gains/losses under GAAP and excluded from non-GAAP measures.
- Beginning Q1 2018, MTM adjustments on a 10% deposit asset are excluded from non-GAAP measures.
Guidance, Outlook, and Risks
Management Commentary: Management utilizes these non-GAAP measures for financial, operating, and planning decisions, believing they provide meaningful comparisons of core ongoing business by removing market-driven investment fluctuations and one-time tax impacts.
Risks and Limitations:
- Non-GAAP measures have limitations and should not be considered in isolation or as a substitute for GAAP results.
- Definitions of these measures may differ from those used by other companies.
- Unrealized investment gains/losses in adjusted stockholders' equity are driven by market movements in interest rates and credit spreads that may not correlate with ultimate cash flows.
Guidance: The provided text does not contain specific forward-looking guidance or numerical outlooks for future periods.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific Q4 2018 revenue, earnings, and premium figures.
- Review Exhibit 99.2 (Supplemental Financial Information) for detailed reconciliations between GAAP and non-GAAP measures.
- Verify the impact of the Tax Cuts and Jobs Act finalization adjustments on 2018 net operating income.
- Confirm the extent of MTM adjustments excluded from operating results due to the adoption of ASU 2016-01.
- Check the Investor Relations section of the company website for the full press release and supplemental data referenced in the filing.