PRI

Primerica Inc

Finance/Real Estate


Presented:02/18/2016
Price:$43.15
Cap:$2.12B
Current Price:$278.67
Cap:$9.43B

Presented

Date02/18/2016
Price$43.15
Market Cap$2.12B
Ent Value$2.99B
P/E Ratio12.05x
Book Value$23.72
Div Yield0%
Shares O/S49.09M
Ave Daily Vol379,634
Short Int17.05%

Current

Price$278.67
Market Cap$9.43B
Primerica, Inc. engages in the distribution of financial products to middle income households. It operates through two segments: Term Life Insurance and Investment & Savings Products. The Term Life Insurance segment includes underwriting profits on its in-force book of term life insurance policies, net of reinsurance, which are underwritten by its life insurance company subsidiaries. The Investment and Savings Products segment includes mutual funds and variable annuities distributed through licensed broker-dealer subsidiaries and includes segregated funds, an individual annuity savings product. Primerica was founded by Arthur L. Williams, Jr. on February 10, 1977 and is headquartered in Duluth, GA.

Publicly traded companies mentioned herein: LPL Financial Holdings Inc (LPLA), Primerica Inc (PRI)

Highlights

Primerica’s (PRI) business is split between ISP - the investment and savings products segment (45% of the company) - and term life insurance (55%). The presenter is short the stock because he sees the potential for both segments to come under varying degrees of pressure over the next 12-24 months and the mid-$40s is nearly 2x book value. The ISP segment is similar to LPL Financial and others selling high fee investment products (i.e., mutual funds and annuities), and regardless of the Department of Labor (DOL) rule to treat broker/ dealers as fiduciaries there is “massive pressure on fees.” In addition, the term life insurance business appears to be over earning. If the situation plays out as he expects shares could decline to around 1x book value, which is $23.72 per share (as of 12/31/15).

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Idea Discussion

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