Primerica 2010 Annual Report - Direct Selling News

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All of our mortgage- and asset-backedsecurities represent variable interests invariable interest entities (VIEs). We are not theprimary beneficiary of these VIEs, because wedo not have the power to directthe activities that mostsignificantly impact the entities’economic performance. Themaximum exposure to loss as aresult of our involvement inthese VIEs equals the carrying value of thesecurities.As required by law, we haveinvestments on deposit withgovernmental authorities andbanks for the protection ofpolicyholders. The fair values ofinvestments on deposits wereas follows:December 31,2010 2009(In thousands)Fair value of investments on deposit withgovernmental authorities $18,984 $18,573We participate in securities lendingtransactions with broker-dealers and otherfinancial institutions to increase investmentincome with minimal risk. We require minimumcollateral on securities loaned equal to 102% ofthe fair value of the loaned securities. Weaccept collateral in the form of securities, whichwe are not able to sell or encumber, and to theextent it declines in value below 100%, werequire additional collateral from theborrower. Any securities collateral received isnot reflected on our Balance Sheet. We alsoaccept collateral in the form of cash, all ofwhich we reinvest. We primarily invest the cashcollateral in short-term, highly ratedsecurities. The cash collateral received isreflected as a payable under securities lendingon our consolidated and combined balancesheet with an offsetting other asset on ourconsolidated and combined balance sheet. Cashcollateral received and reinvested was asfollows:December 31,2010 2009(In thousands)Securities lending collateral $181,726 $510,101126 Freedom Lives Here We also maintain a portfolio of fixed-maturitysecurities that are classified as tradingsecurities. The carrying value of thesesecurities was as follows:December 31,2010 2009(In thousands)Fixed-maturity securities classified as trading,carried at fair value $22,767 $16,996Investments in fixed-maturity and equitysecurities with a cost basis in excess of theirfair values were as follows:December 31,2010 2009(In thousands)Fixed-maturity and equity security investmentswith cost basis in excess of fair value $258,947 $1,522,454
The following tables summarize, for allsecurities in an unrealized loss position, theaggregate fair value and the gross unrealizedloss by length of time such securities havecontinuously been in an unrealized lossposition:December 31, 2010Less than 12 months12 months or longerUnrealizedlossesNumberofsecuritiesUnrealizedlossesNumberofsecuritiesFair valueFair value(Dollars in thousands)Fixed-maturity securities:U.S. government and agencies $ 6,350 $ (61) 2 $ — $ — —Foreign government 2,478 (8) 1 — — —States and politicalsubdivisions 11,015 (293) 29 — — —Corporates 151,291 (2,961) 104 12,690 (845) 14Mortgage-and asset-backedsecurities 30,685 (365) 25 37,215 (2,653) 20Total fixed-maturitysecurities 201,819 (3,688) 49,905 (3,498)Equity securities — — — 30 (7) 2Total fixed-maturity andequity securities $ 201,819 $(3,688) $ 49,935 $ (3,505)December 31, 2009Less than 12 months12 months or longerUnrealizedlossesNumberofsecuritiesUnrealizedlossesNumberofsecuritiesFair valueFair value(Dollars in thousands)Fixed-maturity securities:U.S. government and agencies $ 7,612 $ (104) 3 $ 4,844 $ (258) 2Foreign government 30,441 (341) 30 7,156 (263) 4States and politicalsubdivisions 15,668 (579) 7 548 (18) 1Corporates 347,007 (6,340) 185 471,130 (37,512) 298Mortgage-and asset-backedsecurities 132,369 (1,735) 50 377,035 (67,646) 199Total fixed-maturitysecurities 533,097 (9,099) 860,713 (105,697)Equity securities 10,947 (492) 18 2,179 (230) 17Total fixed-maturity andequity securities $544,044 $ (9,591) $862,892 $(105,927)Primerica 2010 Annual Report 127
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Freedom Lives Here 2010 Annual Repo
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A Main Street Company for Main Stre
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North America’s vastmiddle-income
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More than 50 percent of U.S. househ
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We are PrimericaPrimerica is a Main
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Primerica helps familiescreate a fi
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René Turner wasalways told growing
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We teach people how money works.We
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UNITED STATESSECURITIES AND EXCHANG
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CAUTIONARY STATEMENT CONCERNING FOR
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PART IITEM 1.BUSINESSOverviewPrimer
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them reduce and ultimately pay off
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With the support of our home office
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ecognized with the sales representa
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force. We also profile successful s
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• bonuses and other compensation,
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originators (and in some states as
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We organize and manage our business
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premiums that are less per person p
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insurance policies that we underwri
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assistance, has developed a series
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SEC, FINRA and with respect to 529
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they sell insurance policies. Our C
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preceding 12 months, exceed this st
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interest rate risk and business ris
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operational support to its subsidia
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Privacy of Consumer Information. U.
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media. This negative commentary can
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with such laws and regulations, inc
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and disrupt the economy. Although w
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Our financial strength and credit r
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There are certain risks and uncerta
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26). The update revises the definit
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conduct standards prescribed by FIN
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licensing requirements have caused,
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Terrorist Financing Act and its acc
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educing dividends or other amounts
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housed at our Duluth and Roswell, G
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• for dates as of or periods endi
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to and subject to the limitations o
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Field Audit Department from 1993 to
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Securities Authorized for Issuanceu
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ITEM 6.SELECTED FINANCIAL DATA.The
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pursuant to which we issued to a wh
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ecruiting boost we experienced in t
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• Mortality. We use historical ex
Page 95 and 96: • sales of a higher proportion of
Page 97 and 98: on quality rating, average life and
Page 99 and 100: Deferred Policy Acquisition Costs(D
Page 101 and 102: life insurance processing responsib
Page 103 and 104: einsurance agreements impacted the
Page 105 and 106: Notes to the Pro Forma Statement of
Page 107 and 108: Term Life Insurance Segment ProForm
Page 109 and 110: Investments and Savings ProductsSeg
Page 111 and 112: We believe that the pro forma resul
Page 113 and 114: ecognized in 2008. Excluding the ef
Page 115 and 116: amortize the higher DAC balance res
Page 117 and 118: Corporate and Other DistributedProd
Page 119 and 120: The composition of our invested ass
Page 121 and 122: LIQUIDITY AND CAPITALRESOURCESDivid
Page 123 and 124: surplus notes, hybrid securities or
Page 125 and 126: ITEM 7A. QUANTITATIVE ANDQUALITATIV
Page 127 and 128: AssetsPRIMERICA, INC. AND SUBSIDIAR
Page 129 and 130: PRIMERICA, INC. AND SUBSIDIARIESCon
Page 131 and 132: PRIMERICA, INC. AND SUBSIDIARIESCon
Page 133 and 134: which we are able to reinvest at ou
Page 135 and 136: with reinsured policies. Ceded poli
Page 137 and 138: indemnify and hold the Company harm
Page 139 and 140: New Accounting PrinciplesScope Exce
Page 141 and 142: immediately contributed back to us
Page 143 and 144: The Investment and Savings Products
Page 145: (4) InvestmentsOn March 31, 2010, w
Page 149 and 150: The net effect on stockholders’ e
Page 151 and 152: The amortized cost and fair value o
Page 153 and 154: The roll-forward of credit-related
Page 155 and 156: having similar tenors (e.g., sector
Page 157 and 158: (5) Financial InstrumentsThe carryi
Page 159 and 160: Due from reinsurers includes ceded
Page 161 and 162: (8) Intangible Assets and GoodwillT
Page 163 and 164: (11) Note PayableIn April 2010, we
Page 165 and 166: Income tax expense (benefit) attrib
Page 167 and 168: above, plus an additional 7,098 com
Page 169 and 170: Non-Employee Share-BasedTransaction
Page 171 and 172: We had arrangements with Citi in re
Page 173 and 174: Contingent LiabilitiesThe Company i
Page 175 and 176: ITEM 9. CHANGES IN ANDDISAGREEMENTS
Page 177 and 178: Members of Our Board of DirectorsTh
Page 179 and 180: finance, and risk and asset managem
Page 181 and 182: PART IVITEM 15. EXHIBITS AND FINANC
Page 183 and 184: 10.4 Long-Term Services Agreement d
Page 185 and 186: 10.29 Employment Agreement, dated a
Page 187 and 188: Schedule ISummary of Investments
Page 189 and 190: Schedule IICondensed Financial Info
Page 191 and 192: Schedule IICondensed Financial Info
Page 193 and 194: 101% of the outstanding principal a
Page 195 and 196: GrossamountSchedule IVReinsurancePR
Page 197 and 198:
Annual MeetingThe annual meeting of
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