Primerica 2010 Annual Report - Direct Selling News

2009 Compared to 2008Consolidated OverviewYear endedDecember 31,Change2009 2008 $ %(Dollars in thousands)RevenuesDirect premiums $ 2,112,781 $2,092,792 $ 19,989 *Ceded premiums (610,754) (629,074) 18,320 -3%Net premiums 1,502,027 1,463,718 38,309 3%Net investment income 351,326 314,035 37,291 12%Commissions and fees 335,986 466,484 (130,498) -28%Other, net 53,032 56,187 (3,155) -6%Realized investment (losses) gains ,including OTTI (21,970) (103,480) 81,510 -79%Total revenues 2,220,401 2,196,944 23,457 1%Benefits and expensesBenefits and claims 600,273 938,370 (338,097) -36%Amortization of DAC 381,291 144,490 236,801 164%Insurance commissions 34,388 23,932 10,456 44%Insurance expenses 148,760 141,331 7,429 5%Sales commissions 162,756 248,020 (85,264) -34%Goodwill impairment — 194,992 (194,992) *Other operating expenses 132,978 152,773 (19,795) -13%Total benefits and expenses 1,460,446 1,843,908 (383,462) -21%Income before income taxes 759,955 353,036 406,919 115%Income taxes 265,366 185,354 80,012 43%Net income $ 494,589 $ 167,682 $ 326,907 195%* Less than 1%, or not meaningfulIncome before income taxes. Income beforeincome taxes increased $406.9 million, or 115%,to $760.0 million for the year endedDecember 31, 2009 from $353.0 million for theyear ended December 31, 2008. The increasereflected the impact of a $291.4 million increasein Corporate and Other Distributed Products, a$147.3 million increase in Term Life Insuranceand a $31.8 million decrease in Investments andSavings Products.Total revenues. Total revenues increased$23.5 million, or 1%, to $2.2 billion for the yearended December 31, 2009 from $2.2 billion forthe year ended December 31, 2008. Theincrease reflected the impact of a $69.1 millionincrease in Term Life Insurance due to thechange in our DAC and reserve estimation92 Freedom Lives Here TMapproach in 2008 and an increased allocationof net investment income; a $40.7 millionincrease in Corporate and Other DistributedProducts, due primarily to a lower level ofother-thantemporaryimpairments taken in2009, partially offsetby a decline in salescommissions fromthe sale of our loanproducts; and an$86.4 milliondecrease inInvestment andSavings Productsdue to adversemarket andeconomic conditions.Total benefits andexpenses. Totalbenefits andexpenses decreased$383.5 million, or21%, to $1.5 billionfor the year endedDecember 31, 2009from $1.8 billion forthe year endedDecember 31, 2008.The decreasereflected the impactof a $250.7 milliondecline in Corporate and Other DistributedProducts, which resulted from a $195.0 milliongoodwill impairment charge in 2008 and from adecline in commissions due to lower sales ofloan products; a $78.2 million decrease in TermLife Insurance, primarily due to the impact ofthe change in our DAC and reserve estimationapproach in 2008; and a $54.6 million declinedue to lower sales commissions.Income taxes. Income taxes increased $80.0million, or 43%, to $265.4 million for the yearended December 31, 2009 from $185.4 millionfor the year ended December 31, 2008. Theeffective tax rate was 34.9% and 52.5% for theyears ended December 31, 2009 and 2008,respectively. The decrease in the effective taxrate was primarily a result of the $195.0 millionnon-tax deductible goodwill impairment charge