Primerica 2010 Annual Report - Direct Selling News

Investments and Savings ProductsSegment Actual ResultsThe Transactions had no impact on theInvestments and Savings Products segment. Onan actual basis, Investments and SavingsProducts segment results were as follows:Year endedDecember 31,Change2010 2009 $ %(Dollars in thousands)Revenues:Commissions and fees:Sales-based revenues $ 142,606 $ 118,798 $23,808 20%Asset-based revenues 167,473 127,581 39,892 31%Account-based revenues 41,690 43,247 (1,557) -4%Total commissions and fees 351,769 289,626 62,143 21%Other, net 10,038 10,514 (476) -5%Total revenues 361,807 300,140 61,667 21%Expenses:Amortization of DAC 9,330 7,254 2,076 29%Insurance commissions 7,854 6,831 1,023 15%Sales commissions:Sales-based 100,993 86,912 14,081 16%Asset-based 58,129 42,003 16,126 38%Other operating expenses 71,971 63,736 8,235 13%Total expenses 248,277 206,736 41,541 20%Income before income taxes $ 113,530 $ 93,404 $ 20,126 22%Supplemental information on the underlyingmetrics that drove results was as follows:Year endedDecember 31, Change2010 2009 $ %(Dollars in millions and accounts inthousands)Revenue metric:Product sales $3,623.6 $3,006.6 $ 617.0 21%Average of aggregate clientaccount values $ 31,908 $ 26,845 $5,063 19%Average number of feegeneratingaccounts 2,728 2,838 (110) -4%Commissions and fees revenue increased in2010 primarily as a result of improvingeconomic and market trends and clientdemand. Sales-based commission revenuesprimarily grew as a result of demand, whileasset-based commission revenues were drivenby demand and improved equity valuations. Asa result, sales-based andasset-based commissionexpense grew as well. Assetbasedrevenues andcommission expense in 2010also reflect the impact ofaccruing certain items thathad previously beenaccounted for on a cashbasis. Excluding the impactof these cash-to-accrualadjustments, asset-basedrevenues and commissionswould have increased 22%,consistent with the 19%growth in aggregate clientaccount values.Amortization of DAC andinsurance commissionsincreased in 2010 consistentwith the growth in oursegregated funds business.Additionally, increases inclient account values drivenby improving marketconditions acceleratedamortization of DAC in 2010.Other operating expensesincreased in 2010, largelydue to higher administrativecosts as a result of growth inthe business.Primerica 2010 Annual Report 89