Primerica, Inc. - Quarter Report: 2017 March (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-34680

Primerica, Inc.

(Exact name of registrant as specified in its charter)

Delaware		27-1204330
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1 Primerica Parkway Duluth, Georgia		30099
(Address of principal executive offices)		(ZIP Code)

(770) 381-1000

(Registrant’s telephone number, including area code)

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		As of April 30, 2017
Common Stock, $0.01 Par Value		45,502,370 shares

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION		1
Item 1. Financial Statements (unaudited).		1
Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016		1
Condensed Consolidated Statements of Income for the three months ended March 31, 2017 and 2016		2
Condensed Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2017 and 2016		3
Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2017 and 2016		4
Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2017 and 2016		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.		21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.		35
Item 4. Controls and Procedures.		35
PART II – OTHER INFORMATION		35
Item 1. Legal Proceedings.		35
Item 1A. Risk Factors.		35
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.		36
Item 6. Exhibits.		37
Signatures		38

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

	(Unaudited)
	March 31, 2017			December 31, 2016
	(In thousands)
Assets:
Investments:
Fixed-maturity securities available-for-sale, at fair value (amortized cost: $1,768,726 in 2017 and $1,734,683 in 2016)	$	1,832,228		$	1,792,438
Fixed-maturity securities held-to-maturity, at amortized cost (fair value: $550,863 in 2017 and $513,015 in 2016)		535,160			503,230
Equity securities available-for-sale, at fair value (cost: $36,895 in 2017 and $36,818 in 2016)		46,437			44,894
Trading securities, at fair value (cost: $12,734 in 2017 and $7,382 in 2016)		12,737			7,383
Policy loans		32,969			30,916
Total investments		2,459,531			2,378,861
Cash and cash equivalents		185,762			211,976
Accrued investment income		17,654			16,520
Due from reinsurers		4,219,547			4,193,562
Deferred policy acquisition costs, net		1,767,681			1,713,065
Agent balances, due premiums and other receivables		215,567			210,448
Intangible assets, net (accumulated amortization: $76,082 in 2017 and $75,231 in 2016)		54,065			54,915
Income taxes		37,731			37,369
Other assets		356,139			334,274
Separate account assets		2,356,320			2,287,953
Total assets	$	11,669,997		$	11,438,943

Liabilities and Stockholders’ Equity:
Liabilities:
Future policy benefits		5,736,313			5,673,890
Unearned premiums		511			527
Policy claims and other benefits payable		268,397			268,136
Other policyholders’ funds		373,733			363,038
Notes payable		373,011			372,919
Surplus note		534,435			502,491
Income taxes		237,719			225,006
Other liabilities		449,734			449,963
Payable under securities lending		93,326			73,646
Separate account liabilities		2,356,320			2,287,953
Commitments and contingent liabilities (see Commitments and Contingent Liabilities note)
Total liabilities		10,423,499			10,217,569

Stockholders’ equity:
Common stock ($0.01 par value; authorized 500,000 in 2017 and 2016; issued and outstanding 45,550 shares in 2017 and 45,721 shares in 2016)		455			457
Paid-in capital		28,606			52,468
Retained earnings		1,182,039			1,138,851
Accumulated other comprehensive income (loss), net of income tax:
Unrealized foreign currency translation gains (losses)		(12,082	)		(13,193	)
Net unrealized investment gains (losses):
Net unrealized investment gains not other-than-temporarily impaired		47,535			42,852
Net unrealized investment losses other-than-temporarily impaired		(55	)		(61	)
Total stockholders’ equity		1,246,498			1,221,374
Total liabilities and stockholders’ equity	$	11,669,997		$	11,438,943

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Income – Unaudited

	Three months ended March 31,
	2017			2016
	(In thousands, except per-share amounts)
Revenues:
Direct premiums	$	627,698		$	597,130
Ceded premiums		(399,769	)		(395,333	)
Net premiums		227,929			201,797
Commissions and fees		144,268			128,821
Investment income net of investment expenses		25,612			25,392
Interest expense on surplus note		(5,718	)		(4,154	)
Net investment income		19,894			21,238
Realized investment gains (losses), including other-than- temporary impairment losses		134			(783	)
Other, net		12,939			11,527
Total revenues		405,164			362,600

Benefits and expenses:
Benefits and claims		102,385			90,977
Amortization of deferred policy acquisition costs		51,850			43,129
Sales commissions		73,704			66,643
Insurance expenses		37,621			33,130
Insurance commissions		4,899			4,147
Interest expense		7,127			7,173
Other operating expenses		52,736			47,189
Total benefits and expenses		330,322			292,388
Income before income taxes		74,842			70,212
Income taxes		22,772			25,036
Net income	$	52,070		$	45,176

Earnings per share:
Basic earnings per share	$	1.12		$	0.92
Diluted earnings per share	$	1.11		$	0.92

Weighted-average shares used in computing earnings per share:
Basic		46,301			48,550
Diluted		46,374			48,574

Supplemental disclosures:
Total impairment losses	$	(211	)	$	(2,027	)
Impairment losses recognized in other comprehensive income before income taxes		-			-
Net impairment losses recognized in earnings		(211	)		(2,027	)
Other net realized investment gains		345			1,244
Realized investment gains (losses), including other-than- temporary impairment losses	$	134		$	(783	)

Dividends declared per share	$	0.19		$	0.17

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) – Unaudited

	Three months ended March 31,
	2017			2016
	(In thousands)
Net income	$	52,070		$	45,176
Other comprehensive income (loss) before income taxes:
Unrealized investment gains (losses):
Change in unrealized holding gains (losses) on investment securities		7,281			24,717
Reclassification adjustment for realized investment (gains) losses included in net income		(68	)		887
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses) before income tax expense (benefit)		1,126			16,036
Total other comprehensive income (loss) before income taxes		8,339			41,640
Income tax expense (benefit) related to items of other comprehensive income (loss)		2,539			9,130
Other comprehensive income (loss), net of income taxes		5,800			32,510
Total comprehensive income	$	57,870		$	77,686

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity – Unaudited

	Three months ended March 31,
	2017			2016
	(In thousands)
Common stock:
Balance, beginning of period	$	457		$	483
Repurchases of common stock		(5	)		(12	)
Net issuance of common stock		3			2
Balance, end of period		455			473

Paid-in capital:
Balance, beginning of period		52,468			180,250
Share-based compensation		12,489			10,580
Net issuance of common stock		(3	)		(2	)
Repurchases of common stock		(36,348	)		(52,973	)
Balance, end of period		28,606			137,855

Retained earnings:
Balance, beginning of period		1,138,851			952,804
Net income		52,070			45,176
Dividends		(8,882	)		(8,295	)
Balance, end of period		1,182,039			989,685

Accumulated other comprehensive income (loss):
Balance, beginning of period		29,598			12,235
Change in foreign currency translation adjustment, net of income tax expense (benefit)		1,111			15,868
Change in net unrealized investment gains (losses) during the period, net of income taxes:
Change in net unrealized investment gains (losses) not-other- than temporarily impaired, net of income tax expense (benefit)		4,683			16,640
Change in net unrealized investment losses other-than-temporarily impaired, net of income tax expense (benefit)		6			2
Balance, end of period		35,398			44,745
Total stockholders’ equity	$	1,246,498		$	1,172,758

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows – Unaudited

	Three months ended March 31,
	2017			2016
	(In thousands)
Cash flows from operating activities:
Net income	$	52,070		$	45,176
Adjustments to reconcile net income to cash provided by (used in) operating activities:
Change in future policy benefits and other policy liabilities		71,124			62,000
Deferral of policy acquisition costs		(102,666	)		(86,925	)
Amortization of deferred policy acquisition costs		51,850			43,129
Change in income taxes		6,489			20,854
Excess tax benefits on share-based compensation		3,316			405
Realized investment (gains) losses, including other-than-temporary impairments		(134	)		783
Accretion and amortization of investments		(340	)		(597	)
Depreciation and amortization		3,409			3,139
Change in due from reinsurers		(24,360	)		(28,825	)
Change in agent balances, due premiums and other receivables		(5,119	)		(12,994	)
Trading securities sold, matured, or called (acquired), net		(5,361	)		(2,268	)
Share-based compensation		9,743			7,483
Change in other operating assets and liabilities, net		(7,474	)		(16,040	)
Net cash provided by (used in) operating activities		52,547			35,320

Cash flows from investing activities:
Available-for-sale investments sold, matured or called:
Fixed-maturity securities — sold		28,538			25,104
Fixed-maturity securities — matured or called		46,430			86,609
Equity securities		9			-
Available-for-sale investments acquired:
Fixed-maturity securities		(105,464	)		(55,886	)
Equity securities		(120	)		(99	)
Purchases of property and equipment and other investing activities, net		(3,134	)		(7,761	)
Cash collateral received (returned) on loaned securities, net		19,680			15,901
Sales (purchases) of short-term investments using securities lending collateral, net		(19,680	)		(15,901	)
Net cash provided by (used in) investing activities		(33,741	)		47,967

Cash flows from financing activities:
Dividends paid		(8,882	)		(8,295	)
Common stock repurchased		(29,858	)		(49,943	)
Tax withholdings on share-based compensation		(6,495	)		(3,040	)
Net cash provided by (used in) financing activities		(45,235	)		(61,278	)
Effect of foreign exchange rate changes on cash		215			1,414
Change in cash and cash equivalents		(26,214	)		23,423
Cash and cash equivalents, beginning of period		211,976			152,294
Cash and cash equivalents, end of period	$	185,762		$	175,717

See accompanying notes to condensed consolidated financial statements.

PRIMERICA, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements — Unaudited

(1) Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies

Description of Business. Primerica, Inc. (the "Parent Company"), together with its subsidiaries (collectively, "we", "us" or the "Company"), is a leading distributor of financial products to middle-income households in the United States and Canada. We assist our clients in meeting their needs for term life insurance, which we underwrite, and mutual funds, annuities, managed investments and other financial products, which we distribute primarily on behalf of third parties. Our primary subsidiaries include the following entities: Primerica Financial Services, Inc. ("PFS"), a general agency and marketing company; Primerica Life Insurance Company ("Primerica Life"), our principal life insurance company; Primerica Financial Services (Canada) Ltd., a holding company for our Canadian operations, which includes Primerica Life Insurance Company of Canada ("Primerica Life Canada") and PFSL Investments Canada Ltd. ("PFSL Investments Canada"); and PFS Investments Inc. ("PFS Investments"), an investment products company and broker-dealer. Primerica Life, domiciled in Massachusetts, owns National Benefit Life Insurance Company ("NBLIC"), a New York insurance company. We established Peach Re, Inc. ("Peach Re") and Vidalia Re, Inc. (“Vidalia Re”) as special purpose financial captive insurance companies and wholly owned subsidiaries of Primerica Life. Peach Re and Vidalia Re have each entered into separate coinsurance agreements with Primerica Life whereby Primerica Life has ceded certain level-premium term life insurance policies to Peach Re and Vidalia Re (respectively, the “Peach Re Coinsurance Agreement” and the “Vidalia Re Coinsurance Agreement”).

Basis of Presentation. We prepare our financial statements in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). These principles are established primarily by the Financial Accounting Standards Board ("FASB"). The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect financial statement balances, revenues and expenses and cash flows, as well as the disclosure of contingent assets and liabilities. Management considers available facts and knowledge of existing circumstances when establishing the estimates included in our financial statements.

The accompanying unaudited condensed consolidated financial statements contain all adjustments, generally consisting of normal recurring accruals, which are necessary to fairly present the balance sheets as of March 31, 2017 and December 31, 2016 and the statements of income, comprehensive income (loss), stockholders' equity and cash flows for the three months ended March 31, 2017 and 2016. Results of operations for interim periods are not necessarily indicative of results for the entire year or of the results to be expected in future periods.

These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are sufficient to make the information not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2016 ("2016 Annual Report").

Use of Estimates. The most significant items that involve a greater degree of accounting estimates and actuarial determinations subject to change in the future are the valuation of investments, deferred policy acquisition costs ("DAC"), liabilities for future policy benefits and unpaid policy claims, and income taxes. Estimates for these and other items are subject to change and are reassessed by management in accordance with U.S. GAAP. Actual results could differ from those estimates.

Consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and those entities required to be consolidated under applicable accounting standards. All material intercompany profits, transactions, and balances among the consolidated entities have been eliminated.

Reclassifications. Certain reclassifications have been made to prior-period amounts to conform to current-period reporting classifications. These reclassifications had no impact on net income or total stockholders' equity.

Significant Accounting Policies. All significant accounting policies remain unchanged from the 2016 Annual Report.

New Accounting Principles. In March 2016, the FASB issued Accounting Standards Update No 2016-09 (“ASU 2016-09”) Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 intends to simplify several aspects of the accounting for share-based payment transactions, including the recognition of income tax consequences of awards, the classification of awards as either equity or liabilities, the method of recognizing award forfeitures, and the presentation of items within the statement of cash flows. The most notable impact on the Company’s financial statements involved the change in accounting for the income tax consequences associated with share-based payment transactions in the income statement. Prior to the adoption of ASU 2016-09, the tax effect of the difference between the cumulative compensation cost of a share-based award recognized for financial reporting purposes and the deduction of the award for tax purposes (“excess tax benefits or deficiencies”) was recognized as an adjustment to additional paid-in capital in the statement of stockholders’ equity. The amendments in ASU 2016-09 require that the excess tax benefits or deficiencies be recognized as a reduction to or an increase of income tax expense in the income statement. We adopted the amendments in ASU 2016-09 pertaining to excess tax benefits or deficiencies during

the first quarter of 2017 on a prospective basis, which resulted in a reduction of income tax expense of approximately $3.3 million for the excess tax benefit of share-based transactions for the three months ended March 31, 2017. ASU 2016-09 also changes the presentation of excess tax benefits or deficiencies in the cash flow statement from a financing activity to an operating activity. Therefore, we have presented the excess tax benefits or deficiencies as cash flows from operating activities within the accompanying consolidated statements of cash flows for all periods presented. The adoption of all other amendments outlined in ASU 2016-09 had either no impact to our financial statements or an immaterial impact to our financial statements.

Future Application of Accounting Standards. Recent accounting guidance not discussed here or in the 2016 Annual Report is not applicable, is immaterial to our financial statements, or did not or is not expected to have a material impact on our business. For more information on recently-issued accounting guidance that has not yet been adopted, see Note 1 (Description of Business, Basis of Presentation, and Summary of Accounting Policies) to our consolidated financial statements within our 2016 Annual Report.

(2) Segment and Geographical Information

Segments. We have two primary operating segments — Term Life Insurance and Investment and Savings Products. We also have a Corporate and Other Distributed Products segment.

Notable information included in profit or loss by segment was as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Revenues:
Term life insurance segment	$	234,051		$	206,097
Investment and savings products segment		140,407			124,917
Corporate and other distributed products segment		30,706			31,586
Total revenues	$	405,164		$	362,600

Net investment income:
Term life insurance segment	$	2,303		$	1,848
Investment and savings products segment		-			-
Corporate and other distributed products segment		17,591			19,390
Total net investment income	$	19,894		$	21,238

Amortization of DAC:
Term life insurance segment	$	50,133		$	41,225
Investment and savings products segment		1,734			1,919
Corporate and other distributed products segment		(17	)		(15	)
Total amortization of DAC	$	51,850		$	43,129

Non-cash share-based compensation expense:
Term life insurance segment	$	1,775		$	1,632
Investment and savings products segment		1,180			1,157
Corporate and other distributed products segment		6,788			4,694
Total non-cash share-based compensation expense	$	9,743		$	7,483

Income (loss) before income taxes:
Term life insurance segment	$	49,022		$	46,080
Investment and savings products segment		37,119			31,689
Corporate and other distributed products segment		(11,299	)		(7,557	)
Total income before income taxes	$	74,842		$	70,212

Total assets by segment were as follows:

	March 31, 2017		December 31, 2016
	(In thousands)
Assets:
Term life insurance segment	$	6,023,505	$	5,945,502
Investment and savings products segment ⁽¹⁾		2,463,689		2,391,512
Corporate and other distributed products segment		3,182,803		3,101,929
Total assets	$	11,669,997	$	11,438,943

⁽¹⁾ The Investment and Savings Products segment includes assets held in separate accounts. Excluding separate accounts, the Investment and Savings Products segment assets were approximately $107.5 million and $103.7 million as of March 31, 2017 and December 31, 2016, respectively.

Geographical Information. Results of operations by country and long-lived assets, primarily tangible assets reported in other assets in our unaudited condensed consolidated balance sheets, were as follows:

	Three months ended March 31,
	2017		2016
	(In thousands)
Revenues by country:
United States	$	339,794	$	304,903
Canada		65,370		57,697
Total revenues	$	405,164	$	362,600
Income before income taxes by country:
United States	$	58,034	$	54,958
Canada		16,808		15,254
Total income before income taxes	$	74,842	$	70,212

	March 31, 2017		December 31, 2016
	(In thousands)
Long-lived assets by country:
United States	$	24,855	$	26,685
Canada		738		780
Total long-lived assets	$	25,593	$	27,465

(3) Investments

Available-for-sale Securities. The period-end cost or amortized cost, gross unrealized gains and losses, and fair value of available-for-sale fixed-maturity and equity securities follow:

	March 31, 2017
	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	8,627	$	335	$	(20	)	$	8,942
Foreign government		125,901		6,344		(262	)		131,983
States and political subdivisions		49,774		1,916		(109	)		51,581
Corporates		1,301,394		51,882		(3,336	)		1,349,940
Residential mortgage-backed securities		92,234		4,650		(119	)		96,765
Commercial mortgage-backed securities		114,252		2,653		(403	)		116,502
Other asset-backed securities		76,544		212		(241	)		76,515
Total fixed-maturity securities⁽¹⁾		1,768,726		67,992		(4,490	)		1,832,228
Equity securities		36,895		9,652		(110	)		46,437
Total fixed-maturity and equity securities	$	1,805,621	$	77,644	$	(4,600	)	$	1,878,665

⁽¹⁾	Includes approximately $0.1 million of other-than-temporary impairment (“OTTI”) losses related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income.

	December 31, 2016
	Cost or amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
	(In thousands)
Securities available-for-sale, carried at fair value:
Fixed-maturity securities:
U.S. government and agencies	$	10,148	$	350	$	(24	)	$	10,474
Foreign government		124,274		5,719		(687	)		129,306
States and political subdivisions		43,950		1,903		(129	)		45,724
Corporates		1,281,630		49,272		(5,529	)		1,325,373
Residential mortgage-backed securities		94,708		4,963		(120	)		99,551
Commercial mortgage-backed securities		107,201		2,712		(470	)		109,443
Other asset-backed securities		72,772		98		(303	)		72,567
Total fixed-maturity securities⁽¹⁾		1,734,683		65,017		(7,262	)		1,792,438
Equity securities		36,818		8,589		(513	)		44,894
Total fixed-maturity and equity securities	$	1,771,501	$	73,606	$	(7,775	)	$	1,837,332

⁽¹⁾	Includes approximately $0.1 million of OTTI related to corporates and mortgage- and asset-backed securities recognized in accumulated other comprehensive income.

All of our available-for-sale mortgage- and asset-backed securities represent variable interests in variable interest entities ("VIEs"). We are not the primary beneficiary of these VIEs because we do not have the power to direct the activities that most significantly impact the entities’ economic performance. The maximum exposure to loss as a result of our involvement in these VIEs equals the carrying value of the securities.

The scheduled maturity distribution of the available-for-sale fixed-maturity portfolio at March 31, 2017 follows:

	Amortized cost		Fair value
	(In thousands)
Due in one year or less	$	128,184	$	130,352
Due after one year through five years		725,974		759,552
Due after five years through 10 years		582,067		598,736
Due after 10 years		49,471		53,806
		1,485,696		1,542,446
Mortgage- and asset-backed securities		283,030		289,782
Total fixed-maturity securities	$	1,768,726	$	1,832,228

Expected maturities may differ from scheduled contractual maturities because issuers of securities may have the right to call or prepay obligations with or without call or prepayment penalties.

Unrealized Gains and Losses on Investments. The net effect on stockholders’ equity of unrealized gains and losses on available-for-sale investments was as follows:

	March 31, 2017			December 31, 2016
	(In thousands)
Net unrealized investment gains including OTTI:
Fixed-maturity and equity securities	$	73,044		$	65,831
OTTI		86			95
Net unrealized investment gains excluding OTTI		73,130			65,926
Deferred income taxes		(25,595	)		(23,074	)
Net unrealized investment gains excluding OTTI, net of tax	$	47,535		$	42,852

Trading Securities. We maintain a portfolio mostly of fixed-maturity securities that are classified as trading securities. The carrying values of the fixed-maturity securities classified as trading securities were approximately $12.7 million and $7.4 million as of March 31, 2017 and December 31, 2016, respectively.

Held-to-maturity Security. Concurrent with the execution of the Vidalia Re Coinsurance Agreement, Vidalia Re entered into a Surplus Note Purchase Agreement (the "Surplus Note Purchase Agreement") with Hannover Life Reassurance Company of America and certain of its affiliates (collectively, “Hannover Re”) and a newly formed limited liability company (the "LLC") owned by a third party service provider. Under the Surplus Note Purchase Agreement, Vidalia Re issued a surplus note (the “Surplus Note”) to the LLC in exchange for a credit enhanced note from the LLC with an equal principal amount (the “LLC Note”). The principal amount of both the LLC Note and the Surplus Note will fluctuate over time to coincide with the amount of reserves contractually supported under the Vidalia Re Coinsurance Agreement. Both the LLC Note and the Surplus Note mature on December 31, 2029 and bear interest at an annual interest rate of 4.50%. The LLC Note is guaranteed by Hannover Re through a credit enhancement feature in exchange for a fee, which is reflected in interest expense on our unaudited condensed consolidated statements of income.

See Note 13 (Subsequent Events) for more information on the amendment of the Surplus Note Purchase Agreement.

The LLC is a VIE as its owner does not have an equity investment at risk that is sufficient to permit the LLC to finance its activities without Vidalia Re or Hannover Re. The Parent Company, Primerica Life, and Vidalia Re share the power to direct the activities of the LLC with Hannover Re, but do not have the obligation to absorb losses or the right to receive any residual returns related to the LLC’s primary risks or sources of variability. Through the credit enhancement feature, Hannover Re is the ultimate risk taker in this transaction and bears the obligation to absorb the LLC’s losses in the event of a Surplus Note default in exchange for the fee. Accordingly, the Company is not the primary beneficiary of the LLC and does not consolidate the LLC within its consolidated financial statements.

The LLC Note is classified as a held-to-maturity debt security in the Company’s invested asset portfolio as we have the positive intent and ability to hold the security until maturity. As of March 31, 2017, the LLC Note, which was rated A+ by Fitch Ratings, had an estimated unrealized holding gain of $15.7 million based on its amortized cost and estimated fair value, which is derived using the valuation techniques described in Note 4 (Fair Value of Financial Instruments). See Note 12 (Debt) for more information on the Surplus Note.

See Note 13 (Subsequent Events) for information regarding the amendment made to the Vidalia Re Coinsurance Agreement and the Surplus Note Purchase Agreement on May 4, 2017.

Investments on Deposit with Governmental Authorities. As required by law, we have investments on deposit with governmental authorities and banks for the protection of policyholders. The fair values of investments on deposit were approximately $18.1 million and $18.2 million as of March 31, 2017 and December 31, 2016, respectively.

Securities Lending Transactions. We participate in securities lending transactions with broker-dealers and other financial institutions to increase investment income with minimal risk. We require minimum collateral on securities loaned equal to 102% of the fair value of the loaned securities. We accept collateral in the form of securities, which we are not able to sell or encumber, and to the extent the collateral declines in value below 100%, we require additional collateral from the borrower. Any securities collateral received is not reflected on our unaudited condensed consolidated balance sheets. We also accept collateral in the form of cash, all of which we reinvest. For loans involving unrestricted cash collateral, the collateral is reported as an asset with a corresponding liability representing our obligation to return the collateral. We continue to carry the loaned securities as invested assets on our unaudited condensed consolidated balance sheets during the terms of the loans, and we do not report them as sales. Cash collateral received and reinvested was approximately $93.3 million and $73.6 million as of March 31, 2017 and December 31, 2016, respectively.

Investment Income. The components of net investment income were as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Fixed-maturity securities (available-for-sale)	$	19,069		$	19,249
Fixed-maturity security (held-to-maturity)		5,718			4,154
Equity securities		535			520
Policy loans and other invested assets		305			330
Cash and cash equivalents		194			149
Total return on deposit asset underlying 10% coinsurance agreement		1,032			2,200
Gross investment income		26,853			26,602
Investment expenses		(1,241	)		(1,210	)
Investment income net of investment expenses		25,612			25,392
Interest expense on surplus note		(5,718	)		(4,154	)
Net investment income	$	19,894		$	21,238

The components of net realized investment gains (losses) as well as details on gross realized investment gains and losses and proceeds from sales or other redemptions were as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Net realized investment gains (losses):
Gross gains from sales	$	293		$	1,285
Gross losses from sales		(14	)		(145	)
OTTI losses		(211	)		(2,027	)
Gains (losses) from bifurcated options		66			104
Net realized investment gains (losses)	$	134		$	(783	)

Other-Than-Temporary Impairment. We conduct a review each quarter to identify and evaluate impaired investments that have indications of possible OTTI. An investment in a debt or equity security is impaired if its fair value falls below its cost. Factors considered in determining whether an unrealized loss is temporary include the length of time and extent to which fair value has been below cost, the financial condition and near-term prospects for the issue, and our ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery, which may be maturity for fixed-maturity securities or within a reasonable period of time for equity securities. For additional information, see Note 4 (Investments) to the consolidated financial statements in our 2016 Annual Report.

Available-for-sale fixed-maturity and equity securities with a cost basis in excess of their fair values were approximately $326.4 million and $450.9 million as of March 31, 2017 and December 31, 2016, respectively.

The following tables summarize, for all available-for-sale securities in an unrealized loss position, the aggregate fair value and the gross unrealized loss by length of time such securities have continuously been in an unrealized loss position:

	March 31, 2017
	Less than 12 months							12 months or longer
	Fair value		Unrealized losses			Number of securities		Fair value		Unrealized losses			Number of securities
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	3,670	$	(20	)		4	$	-	$	-			-
Foreign government		19,698		(202	)		20		1,244		(60	)		2
States and political subdivisions		8,921		(109	)		11		-		-			-
Corporates		161,572		(2,083	)		148		28,112		(1,253	)		32
Residential mortgage-backed securities		14,081		(100	)		8		2,970		(19	)		9
Commercial mortgage-backed securities		31,255		(351	)		34		7,285		(52	)		10
Other asset-backed securities		41,270		(215	)		38		1,030		(26	)		2
Total fixed-maturity securities		280,467		(3,080	)				40,641		(1,410	)
Equity securities		191		(7	)		9		517		(103	)		5
Total fixed-maturity and equity securities	$	280,658	$	(3,087	)			$	41,158	$	(1,513	)

	December 31, 2016
	Less than 12 months							12 months or longer
	Fair value		Unrealized losses			Number of securities		Fair value		Unrealized losses			Number of securities
	(Dollars in thousands)
Fixed-maturity securities:
U.S. government and agencies	$	3,668	$	(24	)		4	$	-	$	-			-
Foreign government		34,538		(526	)		36		3,048		(161	)		3
States and political subdivisions		8,902		(129	)		12		-		-			-
Corporates		232,070		(3,484	)		225		45,471		(2,045	)		51
Residential mortgage-backed securities		15,232		(92	)		9		3,606		(28	)		9
Commercial mortgage-backed securities		33,335		(423	)		33		7,663		(47	)		11
Other asset-backed securities		48,275		(260	)		45		1,315		(43	)		3
Total fixed-maturity securities		376,020		(4,938	)				61,103		(2,324	)
Equity securities		4,179		(269	)		12		1,852		(244	)		8
Total fixed-maturity and equity securities	$	380,199	$	(5,207	)			$	62,955	$	(2,568	)

The amortized cost and fair value of available-for-sale fixed-maturity securities in default were as follows:

	March 31, 2017				December 31, 2016
	Amortized cost		Fair value		Amortized cost		Fair value
	(In thousands)
Fixed-maturity securities in default	$	3	$	140	$	5	$	125

Impairment charges recognized in earnings on available-for-sale securities were as follows:

	Three months ended March 31,
	2017		2016
	(In thousands)
Impairments on fixed-maturity securities not in default	$	76	$	1,996
Impairments on fixed-maturity securities in default		-		4
Impairments on equity securities		135		27
Total impairment charges	$	211	$	2,027

The securities noted above were considered to be other-than-temporarily impaired due to: our intent to sell them; adverse credit events, such as news of an impending filing for bankruptcy; analyses of the issuer’s most recent financial statements or other information in which liquidity deficiencies, significant losses and large declines in capitalization were evident; or analyses of rating agency information for issuances with severe ratings downgrades that indicated a significant increase in the possibility of default. We also recognized impairment losses related to invested assets held at the Parent company that we intended to sell to fund share repurchases, as well as impairments on equity securities where we do not expect to recover its cost basis.

As of March 31, 2017, the unrealized losses on our available-for-sale invested asset portfolio were largely caused by interest rate sensitivity and changes in credit spreads. We believe that fluctuations caused by movement in interest rate and credit spreads have little bearing on the recoverability of our investments. We do not consider these investments to be other-than-temporarily impaired

because we have the ability to hold these investments until maturity or a market price recovery, and we have no present intention to dispose of them.

Net impairment losses recognized in earnings for available-for-sale securities were as follows:

	Three months ended March 31,
	2017		2016
	(In thousands)
Total impairment losses related to securities which the Company does not intend to sell or more-likely-than-not will not be required to sell:
Total OTTI losses recognized	$	76	$	441
Less portion of OTTI loss recognized in accumulated other comprehensive income (loss)		-		-
Net impairment losses recognized in earnings for securities which the Company does not intend to sell or more-likely- than-not will not be required to sell before recovery		76		441
OTTI losses recognized in earnings for securities which the Company intends to sell or more-likely-than-not will be required to sell before recovery		135		1,586
Net impairment losses recognized in earnings	$	211	$	2,027

The rollforward of the OTTI recognized in net income for all fixed-maturity securities still held follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Cumulative OTTI recognized in net income for securities still held, beginning of period	$	5,774		$	11,856
Additions for OTTI securities where no OTTI were recognized prior to the beginning of the period		-			433
Additions for OTTI securities where OTTI have been recognized prior to the beginning of the period		76			1,567
Reductions due to sales, maturities, calls, amortization or increases in cash flows expected to be collected over the remaining life of credit impaired securities		(41	)		(1,920	)
Reductions for exchanges of securities previously impaired		(50	)		(1,056	)
Cumulative OTTI recognized in net income for securities still held, end of period	$	5,759		$	10,880

As of March 31, 2017, no impairment losses have been recognized on the LLC Note held-to-maturity security.

Derivatives. Embedded conversion options associated with fixed-maturity securities are bifurcated from the fixed-maturity security host contracts and separately recognized as equity securities. The change in fair value of these bifurcated conversion options is reflected in realized investment gains (losses), including OTTI losses. The fair value of these bifurcated options was approximately $4.3 million as of March 31, 2017 and December 31, 2016.

We have a deferred loss related to closed forward contracts, which were settled several years ago, that were used to mitigate our exposure to foreign currency exchange rates that resulted from the net investment in our Canadian operations. The amount of deferred loss included in accumulated other comprehensive income was approximately $26.4 million as of March 31, 2017 and December 31, 2016. These deferred losses will not be recognized until such time as we sell or substantially liquidate our Canadian operations; although we have no such intention.

(4) Fair Value of Financial Instruments

Fair value is the price that would be received upon the sale of an asset in an orderly transaction between market participants at the measurement date. Fair value measurements are based upon observable and unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our view of market assumptions in the absence of observable market information. We classify and disclose all invested assets carried at fair value in one of the following three categories:

•

Level 1. Quoted prices for identical instruments in active markets. Level 1 primarily consists of financial instruments whose value is based on quoted market prices in active markets, such as exchange-traded common stocks and actively traded mutual fund investments;

•

Level 2. Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 2 includes those financial instruments that are valued using industry-standard pricing

methodologies, models or other valuation methodologies. Various inputs are considered in deriving the fair value of the underlying financial instrument, including interest rate, credit spread, and foreign exchange rates. All significant inputs are observable, or derived from observable information in the marketplace or are supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category primarily include: certain public and private corporate fixed-maturity and equity securities; government or agency securities; certain mortgage- and asset-backed securities and bifurcated conversion options; and

•

Level 3. Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Level 3 consists of financial instruments whose fair value is estimated based on industry-standard pricing methodologies and models using significant inputs not based on, nor corroborated by, readily available market information. Valuations for this category primarily consist of non-binding broker quotes. Financial instruments in this category primarily include less liquid fixed-maturity corporate securities, mortgage-and asset-backed securities.

As of each reporting period, all assets and liabilities recorded at fair value are classified in their entirety based on the lowest level of input (Level 3 being the lowest) that is significant to the fair value measurement. Significant levels of estimation and judgment are required to determine the fair value of certain of our investments. The factors influencing these estimations and judgments are subject to change in subsequent reporting periods.

The estimated fair value and hierarchy classifications for assets and liabilities that are measured at fair value on a recurring basis were as follows:

	March 31, 2017
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	8,942	$	-	$	8,942
Foreign government		-		131,983		-		131,983
States and political subdivisions		-		51,581		-		51,581
Corporates		3,276		1,346,661		3		1,349,940
Residential mortgage-backed securities		-		96,221		544		96,765
Commercial mortgage-backed securities		-		116,502		-		116,502
Other asset-backed securities		-		67,360		9,155		76,515
Total available-for-sale fixed-maturity securities		3,276		1,819,250		9,702		1,832,228
Equity securities		40,989		5,361		87		46,437
Trading securities		-		12,737		-		12,737
Separate accounts		-		2,356,320		-		2,356,320
Total fair value assets	$	44,265	$	4,193,668	$	9,789	$	4,247,722
Fair value liabilities:
Separate accounts	$	-	$	2,356,320	$	-	$	2,356,320
Total fair value liabilities	$	-	$	2,356,320	$	-	$	2,356,320

	December 31, 2016
	Level 1		Level 2		Level 3		Total
	(In thousands)
Fair value assets:
Available-for-sale fixed-maturity securities:
U.S. government and agencies	$	-	$	10,474	$	-	$	10,474
Foreign government		-		129,306		-		129,306
States and political subdivisions		-		45,724		-		45,724
Corporates		3,113		1,322,257		3		1,325,373
Residential mortgage-backed securities		-		98,966		585		99,551
Commercial mortgage-backed securities		-		109,443		-		109,443
Other asset-backed securities		-		65,075		7,492		72,567
Total available-for-sale fixed-maturity securities		3,113		1,781,245		8,080		1,792,438
Equity securities		39,556		5,256		82		44,894
Trading securities		-		7,383		-		7,383
Separate accounts		-		2,287,953		-		2,287,953
Total fair value assets	$	42,669	$	4,081,837	$	8,162	$	4,132,668
Fair value liabilities:
Separate accounts	$	-	$	2,287,953	$	-	$	2,287,953
Total fair value liabilities	$	-	$	2,287,953	$	-	$	2,287,953

In assessing fair value of our investments, we use a third-party pricing service for approximately 94% of our securities that are measured at fair value on a recurring basis. The remaining securities are primarily thinly traded securities such as private placements

and are valued using models based on observable inputs on public corporate spreads having similar characteristics (e.g., sector, average life and quality rating) and liquidity and yield based on quality rating, average life and treasury yields. All observable data inputs are corroborated by independent third-party data. In the absence of sufficient observable inputs, we utilize non-binding broker quotes, which are reflected in our Level 3 classification as we are unable to evaluate the valuation technique(s) or significant inputs used to develop the quotes. Therefore, we do not internally develop the quantitative unobservable inputs used in measuring the fair value of Level 3 investments. However, we do corroborate pricing information provided by our third-party pricing servicing by performing a review of selected securities. Our review activities include obtaining detailed information about the assumptions, inputs and methodologies used in pricing the security; documenting this information; and corroborating it by comparison to independently obtained prices and or independently developed pricing methodologies.

Furthermore, we perform internal reasonableness assessments on fair value determinations within our portfolio throughout the quarter and at quarter-end, including pricing variance analyses and comparisons to alternative pricing sources and benchmark returns. If a fair value appears unusual relative to these assessments, we will re-examine the inputs and may challenge a fair value assessment made by the pricing service. If there is a known pricing error, we will request a reassessment by the pricing service. If the pricing service is unable to perform the reassessment on a timely basis, we will determine the appropriate price by requesting a reassessment from an alternative pricing service or other qualified source as necessary. We do not adjust quotes or prices except in a rare circumstance to resolve a known error.

Because many fixed-maturity securities do not trade on a daily basis, third party pricing services generally determine fair value using industry-standard methodologies, which vary by asset class. For corporates, governments, and agency securities, these methodologies include developing prices by incorporating available market information such as U.S. Treasury curves, benchmarking of similar securities including new issues, sector groupings, quotes from market participants and matrix pricing. Observable information is compiled and integrates relevant credit information, perceived market movements and sector news. Additionally, security prices are periodically back-tested to validate and/or refine models as conditions warrant. Market indicators and industry and economic events are also monitored as triggers to obtain additional data. For certain structured securities (such as mortgage-and asset-backed securities) with limited trading activity, third-party pricing services generally use industry-standard pricing methodologies that incorporate market information, such as index prices, or discounting expected future cash flows based on underlying collateral, and quotes from market participants, to estimate fair value. If these measures are not deemed observable for a particular security, the security will be classified as Level 3 in the fair value hierarchy.

Where specific market information is unavailable for certain securities, pricing models produce estimates of fair value primarily using Level 2 inputs along with certain Level 3 inputs. These models include matrix pricing. The pricing matrix uses current treasury rates and credit spreads received from third-party sources to estimate fair value. The credit spreads incorporate the issuer’s industry- or issuer-specific credit characteristics and the security’s time to maturity, if warranted. Remaining unpriced securities are valued using an estimate of fair value based on indicative market prices that include significant unobservable inputs not based on, nor corroborated by, market information, including the utilization of non-binding broker quotes.

The roll-forward of the Level 3 assets measured at fair value on a recurring basis was as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Level 3 assets, beginning of period	$	8,162		$	783
Net unrealized gains (losses) included in other comprehensive income		(14	)		6
Realized gains (losses) and accretion (amortization) recognized in earnings, including OTTI		7			4
Sales		-			(3	)
Settlements		(228	)		(36	)
Transfers into Level 3		2,435			-
Transfers out of Level 3		(573	)		(1	)
Level 3 assets, end of period	$	9,789		$	753

We obtain independent pricing quotes based on observable inputs as of the end of the reporting period for all securities in Level 2. Those inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, market bids/offers, quoted prices for similar instruments in markets that are not active, and other relevant data. We monitor these inputs for market indicators, industry and economic events. We recognize transfers into new levels and out of previous levels as of the end of the reporting period, including interim reporting periods, as applicable. There were no material transfers between Level 1 and Level 2 or between Level 1 and Level 3 during the three months ended March 31, 2017 and 2016.

The table below is a summary of the estimated fair value for financial instruments.

	March 31, 2017				December 31, 2016
	Carrying value		Estimated fair value		Carrying value		Estimated fair value
	(In thousands)
Assets:
Fixed-maturity securities (available-for-sale)	$	1,832,228	$	1,832,228	$	1,792,438	$	1,792,438
Fixed-maturity securities (held-to-maturity)		535,160		550,863		503,230		513,015
Equity securities		46,437		46,437		44,894		44,894
Trading securities		12,737		12,737		7,383		7,383
Policy loans		32,969		32,969		30,916		30,916
Deposit asset underlying 10% coinsurance agreement		207,163		207,163		202,435		202,435
Separate accounts		2,356,320		2,356,320		2,287,953		2,287,953
Liabilities:
Notes payable⁽¹⁾	$	373,011	$	401,640	$	372,919	$	401,340
Surplus note⁽¹⁾		534,435		550,305		502,491		512,669
Separate accounts		2,356,320		2,356,320		2,287,953		2,287,953

⁽¹⁾ Carrying value amounts shown are net of issuance costs.

The fair values of financial instruments presented above are estimates of the fair values at a specific point in time using various sources and methods, including market quotations and a complex matrix system that takes into account issuer sector, quality, and spreads in the current marketplace.

Recurring fair value measurements. Estimated fair values of investments in available-for-sale fixed-maturity securities are principally a function of current spreads and interest rates that are corroborated by independent third-party data. Therefore, the fair values presented are indicative of amounts we could realize or settle at the respective balance sheet date. We do not necessarily intend to dispose of or liquidate such instruments prior to maturity. Trading securities, which primarily consist of fixed-maturity securities, are carried at fair value. Equity securities, including common and nonredeemable preferred stocks, are carried at fair value. Segregated funds in separate accounts are carried at the underlying value of the variable insurance contracts, which is fair value.

Nonrecurring fair value measurements. The estimated fair value of the held-to-maturity fixed-maturity security, which is classified as a Level 3 fair value measurement, is derived using the credit spread on similarly-rated debt securities and the hypothetical spread of the security’s credit enhancement feature. Policy loans, which are categorized as Level 3 fair value measurements, are carried at the unpaid principal balances. The fair value of policy loans approximate the unpaid principal balances as the timing of repayment is uncertain and the loans are collateralized by the amount of the policy. The deposit asset underlying a 10% coinsurance agreement represents the value of the assets necessary to back the economic reserves held in support of the reinsurance agreement. The carrying value of this deposit asset approximates fair value, which is categorized as Level 3 in the fair value hierarchy. Notes payable represent our publicly-traded senior notes and are valued as a Level 2 fair value measurement using the quoted market price for our notes. The estimated fair value of the Surplus Note is derived by using an assumed credit spread we would expect if Vidalia Re was a credit-rated entity and the hypothetical spread of the Surplus Note’s subordinated structure. The Surplus Note is classified as a Level 3 fair value measurement.

The carrying amounts for cash and cash equivalents, receivables, accrued investment income, accounts payable, cash collateral and payables for security transactions approximate their fair values due to the short-term nature of these instruments. Consequently, such financial instruments are not included in the above table.

(5) Reinsurance

We use reinsurance extensively, which has a significant effect on our results of operations. Reinsurance arrangements do not relieve us of our primary obligation to the policyholder. We monitor the concentration of credit risk we have with any reinsurer, as well as the financial condition of the reinsurers.

Details on in-force life insurance follow:

	March 31, 2017			December 31, 2016
	(Dollars in thousands)
Direct life insurance in force	$	737,155,984		$	731,822,070
Amounts ceded to other companies		(646,882,721	)		(643,364,460	)
Net life insurance in force	$	90,273,263		$	88,457,610
Percentage of reinsured life insurance in force		88	%		88	%

Due from reinsurers includes ceded reserve balances and ceded claim liabilities. Reinsurance receivable and financial strength ratings by reinsurer were as follows:

	March 31, 2017			December 31, 2016
	Reinsurance receivable		A.M. Best rating	Reinsurance receivable		A.M. Best rating
	(In thousands)
Pecan Re Inc.^{(1) (2)}	$	2,778,534	NR	$	2,754,424	NR
SCOR Global Life Reinsurance Companies⁽³⁾		363,520	A		355,759	A
Munich Re of Malta ⁽²⁾		283,989	NR		282,382	NR
Swiss Re Life & Health America Inc.⁽⁴⁾		241,615	A+		249,299	A+
American Health and Life Insurance Company		176,047	B		176,010	B
Munich American Reassurance Company		104,601	A+		106,471	A+
Korean Reinsurance Company		97,133	A		96,921	A
RGA Reinsurance Company		84,479	A+		84,473	A+
Hannover Life Reassurance Company		29,043	A+		22,929	A+
TOA Reinsurance Company		22,708	A+		23,977	A+
All other reinsurers		37,878	-		40,917	-
Due from reinsurers	$	4,219,547		$	4,193,562

NR – not rated

⁽¹⁾	Pecan Re Inc. is a wholly owned subsidiary of Swiss Re Life & Health America Inc.

⁽²⁾	Includes balances ceded under coinsurance transactions of term life insurance policies that were in force as of December 31, 2009. Amounts shown are net of their share of the reinsurance receivable from other reinsurers.

⁽³⁾	Includes amounts ceded to Transamerica Reinsurance Companies and fully retroceded to SCOR Global Life Reinsurance Companies.

⁽⁴⁾	Includes amounts ceded to Lincoln National Life Insurance and fully retroceded to Swiss Re Life & Health America Inc.

Benefits and claims ceded to reinsurers during the three months ended March 31, 2017 and 2016 were $342.8 million and $303.8 million, respectively.

(6) Policy Claims and Other Benefits Payable

Changes in policy claims incurred and other benefits payable were as follows:


	March 31, 2017			December 31, 2016
	(In thousands)
Policy claims and other benefits payable, beginning of period	$	268,136		$	238,157
Less reinsured policy claims and other benefits payable		323,195			263,003
Net balance, beginning of period		(55,059	)		(24,846	)
Incurred related to current year		41,497			143,518
Incurred related to prior years⁽¹⁾		1,647			(522	)
Total incurred		43,144			142,996
Claims paid related to current year, net of reinsured policy claims received		(126,492	)		(203,015	)
Reinsured policy claims received related to prior years, net of claims paid		60,648			29,546
Total paid		(65,844	)		(173,469	)
Foreign currency translation		16			260
Net balance, end of period		(77,743	)		(55,059	)
Add reinsured policy claims and other benefits payable		346,140			323,195
Balance, end of period	$	268,397		$	268,136

⁽¹⁾	Includes the difference between our estimate of claims incurred but not yet reported at period end and the actual incurred claims reported after period end.

The liability for policy claims and other benefits payable on traditional life insurance products includes estimated unpaid claims that have been reported to us and claims incurred but not yet reported. We estimate claims incurred but not yet reported based on our historical claims activity and payment lag time experience.

(7) Stockholders’ Equity

A reconciliation of the number of shares of our common stock follows.

	Three months ended March 31,
	2017			2016
	(In thousands)
Common stock, beginning of period		45,721			48,297
Shares issued for stock options exercised		38			-
Shares of common stock issued upon lapse of restricted stock units ("RSUs")		271			229
Common stock retired		(480	)		(1,231	)
Common stock, end of period		45,550			47,295

The above reconciliation excludes RSUs and performance-based stock units (“PSUs”), which do not have voting rights. As sales restrictions on RSUs lapse and PSUs are earned, we issue common shares with voting rights. As of March 31, 2017, we had a total of approximately 1.0 million RSUs and 54,431 PSUs outstanding.

On November 17, 2016, the Board of Directors authorized a share repurchase program for up to $200.0 million of our outstanding common shares (the “share repurchase program”) for purchases through June 30, 2018. Under the share repurchase program, we repurchased 382,657 shares of our common stock in open market transactions for an aggregate purchase price of approximately $29.9 million through March 31, 2017. Approximately $170.1 million remains for repurchases of our outstanding common stock under the share repurchase program as of March 31, 2017.

(8) Earnings Per Share

The Company has outstanding common stock and equity awards that consist of RSUs, PSUs and stock options. The RSUs maintain non-forfeitable dividend rights that result in dividend payment obligations on a one-to-one ratio with common shares for any future dividend declarations.

Unvested RSUs are deemed participating securities for purposes of calculating earnings per share ("EPS") as they maintain dividend rights. We calculate EPS using the two-class method. Under the two-class method, we allocate earnings to common shares and vested RSUs outstanding for the period. Earnings attributable to unvested participating securities, along with the corresponding share counts, are excluded from EPS as reflected in our unaudited condensed consolidated statements of income.

In calculating basic EPS, we deduct from net income any dividends and undistributed earnings allocated to unvested RSUs and then divide the result by the weighted-average number of common shares and vested RSUs outstanding for the period.

We determine the potential dilutive effect of PSUs and stock options outstanding (“contingently issuable shares”) on EPS using the treasury-stock method. Under this method, we determine the proceeds that would be received from the issuance of the contingently issuable shares if the end of the reporting period were the end of the contingency period. The proceeds from the contingently issuable shares include the remaining unrecognized compensation expense of the awards and the cash received for the exercise price on stock options. We then use the average market price of our common shares during the period the contingently issuable shares were outstanding to determine how many shares we could repurchase with the proceeds raised from the issuance of the contingently issuable shares. The net incremental share count issued represents the potential dilutive securities. We then reallocate earnings to common shares and vested RSUs by incorporating the increased fully diluted share count to determine diluted EPS.

The calculation of basic and diluted EPS follows.

	Three months ended March 31,
	2017			2016
	(In thousands, except per-share amounts)
Basic EPS:
Numerator:
Net income	$	52,070		$	45,176
Income attributable to unvested participating securities		(421	)		(370	)
Net income used in calculating basic EPS	$	51,649		$	44,806
Denominator:
Weighted-average vested shares		46,301			48,550
Basic EPS	$	1.12		$	0.92

Diluted EPS:
Numerator:
Net income	$	52,070		$	45,176
Income attributable to unvested participating securities		(421	)		(370	)
Net income used in calculating diluted EPS	$	51,649		$	44,806
Denominator:
Weighted-average vested shares		46,301			48,550
Dilutive effect of incremental shares to be issued for contingently issuable shares		73			24
Weighted-average shares used in calculating diluted EPS		46,374			48,574
Diluted EPS	$	1.11		$	0.92

(9) Share-Based Transactions

The Company has outstanding equity awards under its Omnibus Incentive Plan ("OIP"). The OIP provides for the issuance of equity awards, including stock options, stock appreciation rights, restricted stock, deferred stock, RSUs, PSUs, unrestricted stock, as well as cash-based awards. In addition to time-based vesting requirements, awards granted under the OIP also may be subject to specified performance criteria. Since 2010, the Company has issued equity awards to our management (officers and other key employees), non-employees who serve on our Board of Directors, and sales force leaders under the OIP. For more information on equity awards granted under the OIP, see Note 14 (Share-Based Transactions) to our consolidated financial statements within our 2016 Annual Report.

In connection with our granting of equity awards to management and members of the Board of Directors, we recognize expense over the requisite service period of the equity award. Additionally, to the extent that equity awards to members of our sales force are an incremental direct cost of successful acquisitions of life insurance policies that result directly from and are essential to the policy acquisition(s) and would not have been incurred had the policy acquisition(s) not occurred, we defer and amortize the fair value of these awards in the same manner as other deferred policy acquisition costs.

The impacts of equity awards granted are as follows:

	Three months ended March 31,
	2017		2016
	(In thousands)
Total equity awards expense recognized	$	9,743	$	7,483
Quarterly incentive awards expense deferred		2,746		2,692

On February 16, 2017, the Compensation Committee of the Board of Directors granted the following equity awards to employees as part of the annual approval of management incentive compensation:

•

116,104 RSUs awarded to management with a measurement-date fair value of $80.45 per unit that have time-based vesting requirements with equal and annual graded vesting over approximately three years subsequent to the grant date.

•

36,046 PSUs awarded under the OIP to our four top executives with a measurement-date fair value of $80.45 per unit. The PSUs will be earned on March 1, 2020 contingent upon the Company achieving a target annual average three-year return on adjusted equity (“ROAE”) for the period from January 1, 2017 through December 31, 2019. The actual number of PSUs that will vest will vary based on the actual ROAE relative to the target ROAE and can range from zero PSUs to 54,069.

All awards granted to employees on February 16, 2017 vest upon voluntary termination of employment by any employee who is “retirement eligible” as of his or her termination date. In order to be retirement eligible, an employee must be at least 55 years old and his or her age plus years of service with the Company must equal at least 75. The number of PSUs that will ultimately vest for a retirement-eligible employee is equal to the amount calculated using the Company’s actual cumulative three-year ROAE ending on December 31, 2019, even if that employee retires prior to the completion of the three-year performance period.

(10) Commitments and Contingent Liabilities

Letter of Credit (“LOC”). Peach Re maintains a credit facility agreement with Deutsche Bank (the "Credit Facility Agreement") to support certain obligations for a portion of the Regulation XXX reserves related to the Peach Re Coinsurance Agreement. Under the Credit Facility Agreement, Deutsche Bank issued a letter of credit for the benefit of Primerica Life with a term ending on January 15, 2026. As of March 31, 2017, the Company was in compliance with all financial covenants under the Credit Facility Agreement. At March 31, 2017, the amount of the LOC outstanding was approximately $394.5 million. This amount will decline over the remaining term of the LOC to correspond with declines in the Regulation XXX reserves.

Further discussion on the Company’s letter of credit is included in Note 16 (Commitments and Contingent Liabilities) to our consolidated financial statements within our 2016 Annual Report.

Contingent Liabilities. The Company is involved from time to time in legal disputes, regulatory inquiries and arbitration proceedings in the normal course of business. These disputes are subject to uncertainties, including the large and/or indeterminate amounts sought in certain of these matters and the inherent unpredictability of litigation. As such, the Company is unable to estimate the possible loss or range of loss that may result from these matters unless otherwise indicated.

The Company is currently undergoing multi-state treasurer unclaimed property audits by 30 jurisdictions focusing on the life insurance claims paying practices of its subsidiaries, Primerica Life and NBLIC. Other jurisdictions may pursue similar audits. The potential outcome of such audits is difficult to predict but could subject the Company to adverse consequences, including, but not limited to, settlement payments, additional payments to beneficiaries and additional escheatment of funds deemed abandoned under state laws. At this time, the Company cannot reasonably estimate the likelihood or the impact of additional costs or liabilities that could result from the resolution of these matters.

(11) Other Comprehensive Income

The components of other comprehensive income (“OCI”), including the income tax expense or benefit allocated to each component, were as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Foreign currency translation adjustments:
Change in unrealized foreign currency translation gains (losses) before income taxes	$	1,126		$	16,036
Income tax expense (benefit) on unrealized foreign currency translation gains (losses)		15			168
Change in unrealized foreign currency translation gains (losses), net of income taxes	$	1,111		$	15,868
Unrealized gain (losses) on available-for-sale securities:
Change in unrealized holding gains (losses) arising during period before income taxes	$	7,281		$	24,717
Income tax expense (benefit) on unrealized holding gains (losses) arising during period		2,548			8,651
Change in unrealized holding gains (losses) on available-for-sale securities arising during period, net of income taxes		4,733			16,066

Reclassification from accumulated OCI to net income for (gains) losses realized on available-for-sale securities		(68	)		887
Income tax (expense) benefit on (gains) losses reclassified from accumulated OCI to net income		(24	)		311
Reclassification from accumulated OCI to net income for (gains) losses realized on available-for-sale securities, net of income taxes		(44	)		576
Change in unrealized gains (losses) on available-for-sale securities, net of income taxes and reclassification adjustment	$	4,689		$	16,642

(12) Debt

Notes Payable. At March 31, 2017, the Company had $375.0 million of publicly-traded, senior unsecured notes with an annual interest rate of 4.75% that are scheduled to mature on July 15, 2022 (the "Senior Notes"). As of March 31, 2017, we were in compliance with the covenants of the Senior Notes. No events of default occurred on the Senior Notes during the three months ended March 31, 2017.

Further discussion on the Company’s Senior Notes is included in Note 10 (Debt) to our consolidated financial statements within our 2016 Annual Report.

Surplus Note. At March 31, 2017, the principal amount outstanding on the Surplus Note issued by Vidalia Re was $535.2 million, equal to the principal amount of the LLC Note invested asset. The principal amount of the Surplus Note and the LLC Note will fluctuate over time to coincide with the amount of reserves being contractually supported. Both the LLC Note and the Surplus Note mature on December 31, 2029 and bear interest at an annual interest rate of 4.50%. For policies issued in 2011 through 2014 that are ceded under the Vidalia Re Coinsurance Agreement, the principal amounts of the Surplus Note and the LLC Note are expected to reach approximately $915.0 million each as the estimated reserves for these policies increase over time.

Further discussion on the Company’s Surplus Note and LLC Note are included in Note 10 (Debt) and Note 4 (Investments) to our consolidated financial statements within our 2016 Annual Report.

(13) Subsequent Events

On May 4, 2017, Primerica Life and Vidalia Re amended the Vidalia Re Coinsurance Agreement (the “Expanded Vidalia Re Coinsurance Agreement”) whereby Primerica Life will also cede level-premium term life insurance policies issued in 2015 and 2016 to Vidalia Re effective June 30, 2017. The Expanded Vidalia Re Coinsurance Agreements also provides the option for Primerica Life to cede level-premium term life insurance policies issued in 2017 to Vidalia Re at a future date.

Concurrent with the execution of the Expanded Vidalia Re Coinsurance Agreement, Vidalia Re entered into an amendment to the Surplus Note Purchase Agreement (the "Expanded Surplus Note Purchase Agreement") with Hannover Re and the LLC. Under the Expanded Surplus Note Purchase Agreement, the capacity of the principal amount of both the Surplus Note and the LLC Note will be increased over time in accordance with the expanded amount of policy reserves being contractually supported under the Expanded Vidalia Re Coinsurance Agreement. The maturity date of both notes will be modified to December 31, 2030 but will still bear interest at an annual rate of 4.5%. The LLC Note, which has been re-rated by Fitch Ratings with no rating change, will still be used to support certain obligations of Vidalia Re for a portion of the Regulation XXX reserves related to the Expanded Vidalia Re Coinsurance Agreement. Based on the estimated reserves for ceded policies issued in 2011 through 2016, the maximum principal amounts of the LLC Note and the Surplus Note are expected to be approximately $1.3 billion each. The LLC Note will still be guaranteed by Hannover Re through the credit enhancement feature in exchange for a fee. The amended financing arrangement remains non-recourse to the Parent Company and Primerica Life, meaning that neither of these companies has guaranteed the Surplus Note or is otherwise liable for reimbursement for any payments required by the credit enhancement feature. No other material terms or conditions of the original Surplus Note Purchase Agreement will change under the Expanded Surplus Note Purchase Agreement.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of Primerica, Inc. (the “Parent Company”) and its subsidiaries (collectively, "we", "us" or the “Company”) for the period from December 31, 2016 to March 31, 2017. As a result, the following discussion should be read in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2016 ("2016 Annual Report"). This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed under the heading “Risk Factors” in the 2016 Annual Report as well as Item 1A of Part II (Other Information) included elsewhere in this report. Actual results may differ materially from those contained in any forward-looking statements.

This MD&A is divided into the following sections:

•

Business Overview

•

Business Trends and Conditions

•

Factors Affecting Our Results

•

Critical Accounting Estimates

•

Results of Operations

•

Financial Condition

•

Liquidity and Capital Resources

Business Overview

We are a leading distributor of financial products to middle-income households in the United States and Canada. We assist our clients in meeting their needs for term life insurance, which we underwrite, and mutual funds, annuities, managed investments and other financial products, which we distribute primarily on behalf of third parties. We have two primary operating segments, Term Life Insurance and Investment and Savings Products; and a third segment, Corporate and Other Distributed Products.

Term Life Insurance. We distribute the term life insurance products that we originate through our three issuing life insurance company subsidiaries: Primerica Life Insurance Company (“Primerica Life”), National Benefit Life Insurance Company (“NBLIC”), and Primerica Life Insurance Company of Canada (“Primerica Life Canada”). Our in-force term insurance policies have level premiums for the stated term period. As such, the policyholder pays the same amount each year. Initial policy term periods are between 10 and 35 years. While premiums are guaranteed to remain level during the initial term period (up to a maximum of 20 years in the United States), our claim obligations generally increase as our policyholders age. In addition, we incur significant upfront costs in acquiring new insurance business. Our deferral and amortization of policy acquisition costs and reserving methodology are designed to match the recognition of premium revenues with the timing of policy lapses and the payment of expected claims obligations.

Investment and Savings Products. In the United States, we distribute mutual fund and managed account products and variable and fixed annuity products of several third-party companies. In Canada, we offer our own Primerica-branded mutual funds, as well as mutual funds of other companies, and segregated funds, which are underwritten by Primerica Life Canada.

Corporate and Other Distributed Products. Our Corporate and Other Distributed Products segment consists primarily of revenues and expenses related to other distributed products, including closed blocks of various insurance products underwritten by NBLIC, prepaid legal services, and other financial products. These products, except for closed blocks of various insurance products underwritten by NBLIC, are distributed pursuant to distribution arrangements with third parties through our independent agent sales force. Net investment income earned on our invested asset portfolio is recorded in our Corporate and Other Distributed Products segment, with the exception of the assumed net interest accreted to our Term Life Insurance segment’s future policy benefit reserve liability less deferred acquisition costs. Interest expense incurred by the Company is attributed solely to the Corporate and Other Distributed Products segment.

Business Trends and Conditions

The relative strength and stability of financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levels and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming a Primerica sales representative offers, which can drive or dampen recruiting. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, interest rates and equity market returns impact consumer demand for the savings and investment products we distribute. Our customers’ perception of the strength of the capital markets may influence their decisions to invest in the investment and savings products we distribute.

The financial and distribution results of our operations in Canada, as reported in U.S. dollars, are affected by changes in the currency exchange rate. The effects of these trends and conditions are discussed below and in the Results of Operations section.

Size of Our Independent Sales Force.

Our ability to increase the size of our independent sales force is largely based on the success of our independent sales force’s recruiting efforts as well as training and motivating recruits to get licensed to sell life insurance. We believe that recruitment and licensing levels are important to sales force trends, and growth in recruiting and licensing is usually indicative of future growth in the overall size of the sales force. Recruiting changes do not always result in commensurate changes in the size of our licensed independent sales force because new recruits may obtain the requisite licenses at rates above or below historical levels.

Details on new recruits and life-licensed sales representative activity were as follows:

	Three months ended March 31,
	2017		2016
New recruits		70,983		63,427
New life-licensed sales representatives		10,903		9,666

New recruits increased during the three months ended March 31, 2017 compared to the prior year period primarily due to sustained growth in the size of our independent sales force, resulting in more agents available to actively recruit. New life-licensed representatives increased during the three months ended March 31, 2017 compared to the same period in 2016 reflecting strong recruiting trends in recent periods.

The size of our life-licensed independent sales force was as follows:

		March 31, 2017				December 31, 2016
Life-licensed sales representatives			117,907				116,827

The size of our life-licensed independent sales force at March 31, 2017 increased compared to December 31, 2016 primarily due to the growth in new life-licensed representatives in recent periods which outpaced non-renewals during the first quarter of 2017.

Term Life Insurance Product Sales and Face Amount In Force.

The average number of life-licensed sales representatives and the number of term life insurance policies issued, as well as the average monthly rate of new policies issued per life-licensed sales representative (historically between 0.18 and 0.22), were as follows:

	Three months ended March 31,
	2017		2016
Average number of life-licensed sales representatives		117,049		107,303
Number of new policies issued		70,642		66,376
Average monthly rate of new policies issued per life-licensed sales representative		0.20		0.21

The increase in new life insurance policies issued during the three months ended March 31, 2017 compared to the prior-year period was primarily driven by the growth in the size of our life-licensed independent sales force in recent periods. Productivity, measured by the average monthly rate of new policies issued per life-licensed sales representative, was relatively consistent with the prior year period and in line with historical experience.

The changes in the face amount of our in-force book of term life insurance policies were as follows:

	Three months ended March 31,
	2017			% of beginning balance			2016			% of beginning balance
	(Dollars in millions)
Face amount in force, beginning of period	$	728,385					$	693,194
Net change in face amount:
Issued face amount		21,628			3	%		19,790			3	%
Terminations		(16,704	)		(2	)%		(13,814	)		(2	)%
Foreign currency		447		*				5,462			1	%
Net change in face amount		5,372			1	%		11,438			2	%
Face amount in force, end of period	$	733,756					$	704,632

*	Less than 1%.

The face amount of term life policies in force as of March 31, 2017 increased 4% as compared to March 31, 2016 primarily due to the impact of strong policy sales. As a percentage of the beginning face amount in force, issued face amount as well as terminations during the three months ended March 31, 2017 remained consistent with the prior year period. The impact of foreign currency translation on face amount in force was minimal during the first quarter of 2017, while the strengthening of the Canadian dollar spot rate relative to the U.S. dollar favorably impacted the face amount in force during the prior year period.

Investment and Savings Products Sales, Asset Values and Accounts .

Investment and savings products sales and average client asset values were as follows:

	Three months ended March 31,				Change
	2017		2016		$			%
	(Dollars in millions)
Product sales:
Retail mutual funds	$	985	$	810	$	175			22	%
Annuities and other		427		434		(7	)		(2	)%
Total sales-based revenue generating product sales		1,412		1,244		168			14	%
Managed investments		71		45		26			57	%
Segregated funds and other		102		87		15			18	%
Total product sales	$	1,585	$	1,376	$	209			15	%
Average client asset values:
Retail mutual funds	$	33,333	$	28,868	$	4,465			15	%
Annuities and other		16,205		14,077		2,128			15	%
Managed investments		1,954		1,582		372			24	%
Segregated funds		2,331		2,120		211			10	%
Total average client asset values	$	53,823	$	46,647	$	7,176			15	%

The rollforward of asset values in client accounts was as follows:

	Three months ended March 31,
	2017			% of beginning balance			2016			% of beginning balance
	(Dollars in millions)
Asset values, beginning of period	$	52,339					$	47,353
Net change in asset values:
Inflows		1,585			3	%		1,376			3	%
Redemptions		(1,265	)		(2	)%		(1,153	)		(2	)%
Net inflows		320			1	%		223		*
Change in market value, net		2,219			4	%		43		*
Foreign currency, net		47		*				555			1	%
Net change in asset values		2,586			5	%		821			2	%
Asset values, end of period	$	54,925					$	48,174

*	Less than 1%.

Average number of fee-generating positions was as follows:

	Three months ended March 31,				Change
	2017		2016		Positions		%
	(Positions in thousands)
Average number of fee-generating positions⁽¹⁾:
Recordkeeping and custodial		2,218		2,191		27		1	%
Recordkeeping only		670		666		4		1	%
Total average number of fee- generating positions		2,888		2,857		31		1	%

⁽¹⁾	We receive recordkeeping fees by mutual fund positions. An individual client account may include multiple mutual fund positions. We may also receive fees earned for custodial services that we provide to clients with retirement plan accounts that hold positions in these mutual funds.

Product sales. Investment and savings products sales increased in the first quarter of 2017 compared with the prior year period largely due to the positive impact of market performance on customer demand for U.S. retail mutual funds in recent periods, partially offset by a decline in variable annuity sales, which was consistent with recent industry trends, as well as lower fixed indexed annuity sales.

Average client asset values. The growth in average client asset values during the first quarter of 2017 compared with the prior year period was primarily driven by positive market performance during the last 12 months and continued net inflows.

Rollforward of client asset values. Client asset values increased in the first quarter of 2017 compared with the prior year period largely due to an increase in market value and continued inflows from product sales, which outpaced redemptions.

Average number of fee-generating positions. The average number of fee-generating positions increased during the three months ended March 31, 2017 from the prior year period primarily due to the cumulative effect of product sales of mutual funds and managed accounts investments that are serviced on the Company’s recordkeeping and custodial services platform.

Other business trends and conditions.

Regulatory changes can also impact our product sales. On April 8, 2016, the Department of Labor (“DOL”) published a final regulation (“the DOL Fiduciary Rule”), which more broadly defines the circumstances under which a person or entity may be considered a fiduciary for purposes of the prohibited transaction rules of the Employee Retirement Income Security Act and Internal Revenue Code (“IRC”) Section 4975. IRC Section 4975 prohibits certain types of compensation paid by third parties with respect to transactions involving assets in qualified accounts, including individual retirement accounts (“IRAs”). In connection with the DOL Fiduciary Rule, the DOL also issued new exemptions and amended several existing exemptions. On February 3, 2017, the President of the United States issued a memorandum directing the DOL to review the DOL Fiduciary Rule and the exemptions to determine, based on certain factors, whether they should be revised or rescinded. The DOL Fiduciary Rule and transitional exemptions are scheduled to become applicable on June 9, 2017, with the final exemptions scheduled to go into effect on January 1, 2018, though either or both of these dates could be delayed. The DOL has stated that it will conduct the review and make the determinations directed by the President during the transition period from June 9, 2017 until January 1, 2018.

IRAs and other qualified accounts are an important component of the investment and savings products we distribute. If the DOL Fiduciary Rule and the final exemptions were to become applicable without revisions, we believe that certain changes to our qualified plan business would be needed in order for us to continue to help investors save for retirement. Though we plan to make some modifications to our sales processes beginning on June 9, 2017, because of the uncertainty of the status of the DOL Fiduciary Rule and the final exemptions, we cannot determine the extent and nature of the changes we ultimately will make. Additionally, we have not determined the extent to which we would make necessitated compensation, product or other changes to our qualified plan business, nor whether we would make such changes consistent across our non-qualified business. As a result, we are currently unable to quantify the impact on our business, financial position or results of operations. During the year ended December 31, 2016, average client assets held in U.S. qualified retirement plans accounted for an estimated 59% of total average client account assets. During the year ended December 31, 2016, product sales of assets held in U.S. qualified retirement plans accounted for approximately 56% of total investment and savings product sales.

Factors Affecting Our Results

Term Life Insurance Segment. Our Term Life Insurance segment results are primarily driven by sales volumes, the accuracy of our pricing assumptions, terms and use of reinsurance, and expenses.

Sales and policies in force. Sales of term policies and the size and characteristics of our in-force book of policies are vital to our results over the long term. Premium revenue is recognized as it is earned over the term of the policy, and eligible acquisition expenses are deferred and amortized ratably with the level premiums of the underlying policies. However, because we incur significant cash outflows at or about the time policies are issued, including the payment of sales commissions and underwriting costs, changes in life insurance sales volume will have a more immediate effect on our cash flows.

Historically, we have found that while sales volume of term life insurance products between fiscal periods may vary based on a variety of factors, the productivity of individual sales representatives generally remains within a relatively narrow range (i.e., an average monthly rate of new policies issued per life-licensed sales representative between 0.18 and 0.22), and consequently, our sales volume over the longer term generally correlates to the size of our independent sales force.

Pricing assumptions. Our pricing methodology is intended to provide us with appropriate profit margins for the risks we assume. We determine pricing classifications based on the coverage sought, such as the size and term of the policy, and certain policyholder attributes, such as age and health. In addition, we generally utilize unisex rates for our term life insurance policies. The pricing assumptions that underlie our rates are based upon our best estimates of mortality, persistency and interest rates at the time of issuance, sales force commission rates, issue and underwriting expenses, operating expenses and the characteristics of the insureds, including the distribution of sex, age, underwriting class, product and amount of coverage. Our results will be affected to the extent there is a variance between our pricing assumptions and actual experience.

•

Persistency. Persistency is a measure of how long our insurance policies stay in force. As a general matter, persistency that is lower than our pricing assumptions adversely affects our results over the long term because we lose the recurring revenue stream associated with the policies that lapse. Determining the near-term effects of changes in persistency is more complicated. When actual persistency is lower than our pricing assumptions, we must accelerate the amortization of deferred policy acquisition costs ("DAC"). The resultant increase in amortization expense is offset by a corresponding release of reserves associated with lapsed policies, which causes a reduction in benefits and claims expense. The future policy benefit reserves associated with any given policy will change over the term of such policy. As a general matter, future policy benefit reserves are lowest at the inception of a policy term and rise steadily to a peak before declining to zero at the expiration of the policy term. Accordingly, depending on when the lapse occurs in relation to the overall policy term, the reduction in benefits and claims expense may be greater or less than the increase in amortization expense, and, consequently, the effects on earnings for a given period could be positive or negative. Persistency levels will impact results to the extent actual experience deviates from the persistency assumptions used to price our products.

•

Mortality. Our profitability will fluctuate to the extent actual mortality rates differ from those used in our pricing assumptions. We mitigate a significant portion of our mortality exposure through reinsurance.

•

Interest Rates. We use an assumption for future interest rates that initially reflects the current low interest rate environment gradually increasing to a level consistent with historical experience. Both DAC and the future policy benefit reserve liability increase with the assumed interest rate. Since DAC is higher than the future policy benefit reserve liability in the early years of a policy, a lower assumed interest rate generally will result in lower profits. In the later years, when the future policy benefit reserve liability is higher than DAC, a lower assumed interest rate generally will result in higher profits. These assumed interest rates, which like other pricing assumptions are locked in at issue, impact the timing but not the aggregate amount of DAC and future policy benefit reserve changes. We allocate net investment income generated by the investment portfolio to the Term Life Insurance segment in an amount equal to the assumed net interest accreted to the segment’s U.S. generally accepted accounting principles (“U.S. GAAP”)-measured future policy benefit reserve liability less DAC. All remaining net investment income, and therefore the impact of actual interest rates, is attributed to the Corporate and Other Distributed Products segment.

Reinsurance. We use reinsurance extensively, which has a significant effect on our results of operations. Since the mid-1990s, we have reinsured between 60% and 90% of the mortality risk on our U.S. term life insurance policies on a quota share yearly renewable term ("YRT") basis. In Canada, historically we utilized reinsurance arrangements similar to the U.S. in certain years and reinsured only face amounts above $500,000 in other years. Since the first quarter of 2012, we have utilized a YRT reinsurance arrangement in Canada similar to our U.S. program. YRT reinsurance permits us to set future mortality at contractual rates by policy class. To the extent actual mortality experience is more or less favorable than the contractual rate, the reinsurer will earn incremental profits or bear the incremental cost, as applicable. In contrast to coinsurance, which is intended to eliminate all risks (other than counterparty risk of the reinsurer) and rewards associated with a specified percentage of the block of policies subject to the reinsurance arrangement, the YRT reinsurance arrangements we enter into are intended only to reduce volatility associated with variances between estimated and actual mortality rates.

In 2010, as part of our corporate reorganization and the initial public offering of our common stock, we entered into significant coinsurance transactions (the "IPO coinsurance transactions") and ceded between 80% and 90% of the risks and rewards of our term life insurance policies that were in force at year-end 2009. Beginning in 2017, policies reaching their initial level term period are no longer ceded under the IPO coinsurance transactions. We continue to administer all policies subject to these coinsurance agreements.

The effect of our reinsurance arrangements on ceded premiums and benefits and expenses on our statement of income follows:

•

Ceded premiums. Ceded premiums are the premiums we pay to reinsurers. These amounts are deducted from the direct premiums we earn to calculate our net premium revenues. Similar to direct premium revenues, ceded coinsurance premiums remain level over the initial term of the insurance policy. Ceded YRT premiums increase over the period that the policy has been in force. Accordingly, ceded YRT premiums generally constitute an increasing percentage of direct premiums over the policy term.

•

Benefits and claims. Benefits and claims include incurred claim amounts and changes in future policy benefit reserves. Reinsurance reduces incurred claims in direct proportion to the percentage ceded. Coinsurance also reduces the change in future policy benefit reserves in direct proportion to the percentage ceded, while YRT reinsurance does not significantly impact the change in these reserves.

•

Amortization of DAC. DAC, and therefore amortization of DAC, is reduced on a pro-rata basis for the coinsured business, including the business reinsured with the IPO coinsurance transactions. There is no impact on amortization of DAC associated with our YRT contracts.

•

Insurance expenses. Insurance expenses are reduced by the allowances received from coinsurance. There is no impact on insurance expenses associated with our YRT contracts.

We may alter our reinsurance practices at any time due to the unavailability of YRT reinsurance at attractive rates or the availability of alternatives to reduce our risk exposure. We presently intend to continue ceding approximately 90% of our U.S. and Canadian mortality risk on new business.

Expenses. Results are also affected by variances in client acquisition, maintenance and administration expense levels.

Investment and Savings Products Segment. Our Investment and Savings Products segment results are primarily driven by sales, the value of assets in client accounts for which we earn ongoing management, marketing and support, and distribution fees, and the number of recordkeeping and custodial fee-generating positions we administer.

Sales. We earn commissions and fees, such as dealer re-allowances and marketing and support fees, based on sales of mutual fund products and annuities. Sales of investment and savings products are influenced by the overall demand for investment products in the United States and Canada, as well as by the size and productivity of our independent sales force. We generally experience seasonality in our Investment and Savings Products segment results due to our high concentration of sales of retirement account products. These accounts are typically funded in February through April, coincident with our clients' tax return preparation season. While we believe the size of our independent sales force is a factor in driving sales volume in this segment, there are a number of other variables, such as economic and market conditions, which may have a significantly greater effect on sales volume in any given fiscal period.

Asset values in client accounts. We earn marketing and support fees as well as distribution fees (trail commissions or, with respect to U.S. mutual funds, 12b-1 fees) on mutual fund and annuity assets in the United States and Canada. In the United States, we also earn investment advisory fees on assets in the managed investments program. In Canada, we earn management fees on certain mutual fund assets and on the segregated funds for which we serve as investment manager. Asset values are influenced by new product sales, ongoing contributions to existing accounts, redemptions and the change in market values in existing accounts. While we offer a wide variety of asset classes and investment styles, our clients' accounts are primarily invested in equity funds.

Positions. We earn recordkeeping fees for administrative functions we perform on behalf of several of our retail and managed mutual fund providers. An individual client account may include multiple fund positions for which we earn recordkeeping fees. We may also receive fees earned for non-bank custodial services that we provide to clients with retirement plan accounts.

Sales mix. While our investment and savings products all provide similar long-term economic returns to the Company, our results in a given fiscal period will be affected by changes in the overall mix of products within these categories. Examples of changes in the sales mix that influence our results include the following:

•

sales of annuity products in the United States will generate higher revenues in the period such sales occur than sales of other investment products that either generate lower upfront revenues or, in the case of managed investments and segregated funds, no upfront revenues;

•

sales of a higher proportion of managed investments and segregated funds products will generally extend the time over which revenues can be earned because we are entitled to higher revenues based on assets under management for these accounts in lieu of upfront revenues; and

•

sales of a higher proportion of mutual fund products and the composition of the fund families sold will impact the timing and amount of revenue we earn given the marketing, support, recordkeeping and custodial services we provide for the various mutual fund products we distribute.

Corporate and Other Distributed Products Segment. We earn revenues and pay commissions and referral fees within our Corporate and Other Distributed Products segment for various other insurance products, prepaid legal services and other financial products, all of which are originated by third parties. Our Corporate and Other Distributed Products segment also includes in-force policies from several discontinued lines of insurance underwritten by National Benefit Life Insurance Company (“NBLIC”).

Corporate and Other Distributed Products segment net investment income reflects actual net investment income realized by the Company less the amount allocated to our Term Life Insurance segment based on the assumed net interest accreted to the segment’s U.S. GAAP-measured future policy benefit reserve liability less DAC. Actual net investment income reflected in the Corporate and Other Distributed Products segment is impacted by the size and performance of our invested asset portfolio, which can be influenced by interest rates, credit spreads, and the mix of invested assets.

The Corporate and Other Distributed Products segment is also affected by corporate income and expenses not allocated to our other segments, general and administrative expenses (other than expenses that are allocated to our Term Life Insurance or Investment and Savings Products segments), interest expense on notes payable and reserve financing transactions as well as realized gains and losses on our invested asset portfolio.

Capital Structure. Our financial results are affected by our capital structure, which includes our senior unsecured notes (the “Senior Notes”) and common stock. See Note 12 (Debt) and Note 7 (Stockholders’ Equity) to our unaudited condensed consolidated financial statements included elsewhere in this report for more information on changes in our capital structure.

Foreign Currency. The Canadian dollar is the functional currency for our Canadian subsidiaries and our consolidated financial results, reported in U.S. dollars, are affected by changes in the currency exchange rate. As such, the translated amount of revenues, expenses, assets and liabilities attributable to our Canadian subsidiaries will be higher or lower in periods where the Canadian dollar appreciates or weakens relative to the U.S. dollar, respectively. See Item 7A. Quantitative and Qualitative Disclosures About Market Risk – Canadian Currency Risk included in our 2016 Annual Report and Note 2 (Segment and Geographical Information) to our unaudited condensed consolidated financial statements included elsewhere in this report for more information on our Canadian subsidiaries and the impact of foreign currency on our financial results.

Critical Accounting Estimates

We prepare our financial statements in accordance with U.S. GAAP. These principles are established primarily by the Financial Accounting Standards Board. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions based on currently available information when recording transactions resulting from business operations. Our significant accounting policies are described in Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies) to our consolidated financial statements included in our 2016 Annual Report. The most significant items on our condensed consolidated balance sheets are based on fair value determinations, accounting estimates and actuarial determinations, which are susceptible to changes in future periods and could affect our results of operations and financial position.

The estimates that we deem to be most critical to an understanding of our results of operations and financial position are those related to DAC, future policy benefit reserves and corresponding amounts due from reinsurers, income taxes, and the valuation of investments.

The preparation and evaluation of these critical accounting estimates involve the use of various assumptions developed from management’s analyses and judgments. Subsequent experience or use of other assumptions could produce significantly different results.

Accounting Policy Changes. During the three months ended March 31, 2017, there have been no changes in the accounting methodology for items that we have identified as critical accounting estimates. For additional information regarding our critical accounting estimates, see the Critical Accounting Estimates section of MD&A included in our 2016 Annual Report.

Results of Operations

Primerica, Inc. and Subsidiaries Results. Our results of operations were as follows:

	Three months ended March 31,						Change
	2017			2016			$			%
	(Dollars in thousands)
Revenues:
Direct premiums	$	627,698		$	597,130		$	30,568			5	%
Ceded premiums		(399,769	)		(395,333	)		4,436			1	%
Net premiums		227,929			201,797			26,132			13	%
Commissions and fees		144,268			128,821			15,447			12	%
Investment income net of investment expenses		25,612			25,392			220			1	%
Interest expense on surplus note		(5,718	)		(4,154	)		1,564			38	%
Net investment income		19,894			21,238			(1,344	)		(6	)%
Realized investment gains (losses), including other-than- temporary impairment losses		134			(783	)		917		*
Other, net		12,939			11,527			1,412			12	%
Total revenues		405,164			362,600			42,564			12	%

Benefits and expenses:
Benefits and claims		102,385			90,977			11,408			13	%
Amortization of DAC		51,850			43,129			8,721			20	%
Sales commissions		73,704			66,643			7,061			11	%
Insurance expenses		37,621			33,130			4,491			14	%
Insurance commissions		4,899			4,147			752			18	%
Interest expense		7,127			7,173			(46	)		(1	)%
Other operating expenses		52,736			47,189			5,547			12	%
Total benefits and expenses		330,322			292,388			37,934			13	%
Income before income taxes		74,842			70,212			4,630			7	%
Income taxes		22,772			25,036			(2,264	)		(9	)%
Net income	$	52,070		$	45,176		$	6,894			15	%

*	Not meaningful.

Results for the Three Months Ended March 31, 2017

Total revenues. Total revenues increased during the three months ended March 31, 2017 compared to the same period in 2016 primarily due to incremental premiums on term life insurance policies that are not subject to the IPO coinsurance transactions as well as higher direct premiums reflecting strong term life insurance policy sales in recent periods. Commissions and fees from our Investment and Savings Products segment increased mainly as a result of higher investment and savings product sales and growth in client assets values.

The decline in net investment income during the three months ended March 31, 2017 compared to the prior year period was mostly attributable to lower yield on our invested asset portfolio of approximately $1.2 million, offset by approximately $1.3 million of incremental yield from higher average invested assets. Also contributing to the decline in net investment income was the impact from the mark-to-market adjustment on the deposit asset backing an IPO-related reinsurance agreement; which was negligible in the first quarter of 2017 but was a positive adjustment of approximately $1.0 million in the first quarter of 2016. Interest expense on surplus note will fluctuate from period to period along with the principal amount of our surplus note (the “Surplus Note”) based on the balance of reserves being contractually supported under a redundant reserve financing transaction used by our Vidalia Re, Inc. (“Vidalia Re”) captive insurance company. Investment income earned on our held-to-maturity invested asset completely offsets the interest expense on Surplus Note, thereby eliminating any impact on net investment income.

For more information on the Surplus Note, see Note 12 (Debt) and for additional information on the redundant reserve financing transaction used by Vidalia Re, see Note 3 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.

Other, net revenues increased during the three months ended March 31, 2017 compared to the same period in 2016 largely due to the increase in fees for our proprietary sales force support system, consistent with subscriber growth as the size of our independent sales force has increased. Fees collected for our proprietary sales force support system are allocated between our Term Life Insurance segment and our Investment and Savings Products segment based on the estimated number of sales force representatives that are licensed to sell products in each respective segment.

Total benefits and expenses. Total benefits and expenses increased during the three months ended March 31, 2017 compared to the prior year period largely due to the growth in premium-related costs, which include benefits and claims, amortization of DAC, and insurance expenses. Also contributing to the increase in insurance and other operating expenses were higher employee-related costs of approximately $4.5 million and increased technology-related costs of approximately $2.0 million primarily for our proprietary sales force support system’s mobile application. The increase in sales commissions for the three months ended March 31, 2017 compared to the prior year period was in line with increases in commissions and fees revenues.

Income taxes. Our effective income tax rate was 30.4% and 35.7% for the three months ended March 31, 2017 and 2016, respectively. The change in the effective income tax rate was primarily due to the current period prospective adoption of Accounting Standards Update No 2016-09 (“ASU 2016-09”) Compensation—Stock Compensation (Topic 718) - Improvements to Employee Share-Based Payment Accounting, which resulted in the recognition of approximately $3.3 million in excess tax benefits from the deductibility of share-based payments. Also impacting the tax rate was the recognition of approximately $0.7 million of certain tax benefits for which the statute of limitations expired during the first quarter of 2017. For more information on ASU 2016-09, see Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies) to our unaudited condensed consolidated financial statements included elsewhere in this report.

For additional information, see the Segment Results discussions below.

Segment Results

Term Life Insurance Segment Results. Our results for the Term Life Insurance segment were as follows:

	Three months ended March 31,						Change
	2017			2016			$		%
	(Dollars in thousands)
Revenues:
Direct premiums	$	620,379		$	589,244		$	31,135		5	%
Ceded premiums		(398,077	)		(393,270	)		4,807		1	%
Net premiums		222,302			195,974			26,328		13	%
Allocated investment income		2,303			1,848			455		25	%
Other, net		9,446			8,275			1,171		14	%
Total revenues		234,051			206,097			27,954		14	%
Benefits and expenses:
Benefits and claims		97,771			86,795			10,976		13	%
Amortization of DAC		50,133			41,225			8,908		22	%
Insurance expenses		35,717			31,029			4,688		15	%
Insurance commissions		1,408			968			440		45	%
Total benefits and expenses		185,029			160,017			25,012		16	%
Income before income taxes	$	49,022		$	46,080		$	2,942		6	%

Results for the Three Months Ended March 31, 2017

Net premiums. Direct premiums grew in the three months ended March 31, 2017 compared to the three months ended March 31, 2016 primarily due to the increase in the number of new policies issued in recent periods. The growth of ceded premiums during the three months ended March 31, 2017 reflects our increasing non-level YRT ceded premiums, partially offset by the run-off of business subject to the IPO coinsurance transactions. The continued impact from the increase in direct premiums as well as the run-off of business subject to the IPO coinsurance transactions resulted in net premiums growing faster than direct premiums.

Benefits and claims. Benefits and claims for the three months ended March 31, 2017 grew in line with net premiums but were approximately $3 million higher than expected during the quarter reflecting claims experience, which was above our historical trends. Partially offsetting the impact of higher claims in 2017 was lower than expected increases to future policy benefits reserves as a result of weaker persistency. The YRT rate reductions negotiated for 2014 and later issue years continue to dampen the growth in benefits and claims.

Amortization of DAC. The amortization of DAC increased during the three months ended March 31, 2017 compared to same period in 2016 largely due to growth in net premiums. Additionally, approximately $2.5 million of higher amortization was recognized due to lower persistency than the prior year period, and approximately $1.5 million of higher amortization was recognized for lapses of certain policies held by clients in Louisiana. The effect of terminating policies, which we restricted from lapsing at the request of the Louisiana Department of Insurance in 2016 due to severe flooding, was recognized in the first quarter of 2017 once the restriction was removed and the policies ultimately lapsed.

Insurance expenses. Growth in the business and the run-off of expense allowance related to the IPO coinsurance transactions resulted in a year-over-year increase in insurance expenses of approximately $1.5 million in the first quarter of 2017 compared to the first quarter of 2016. Higher expenses incurred for our proprietary sales force support system’s mobile application and higher employee-related costs also contributed to the increase in insurance expenses by approximately $1.7 million and $1.2 million, respectively.

Investment and Savings Products Segment Results. Investment and Savings Products segment results were as follows:

	Three months ended March 31,				Change
	2017		2016		$			%
	(Dollars in thousands)
Revenues:
Commissions and fees:
Sales-based revenues	$	60,517	$	56,220	$	4,297			8	%
Asset-based revenues		64,474		55,306		9,168			17	%
Account-based revenues		13,217		11,308		1,909			17	%
Other, net		2,199		2,083		116			6	%
Total revenues		140,407		124,917		15,490			12	%
Expenses:
Amortization of DAC		1,734		1,919		(185	)		(10	)%
Insurance commissions		2,959		2,631		328			12	%
Sales commissions:
Sales-based		43,209		40,328		2,881			7	%
Asset-based		27,630		23,093		4,537			20	%
Other operating expenses		27,756		25,257		2,499			10	%
Total expenses		103,288		93,228		10,060			11	%
Income before income taxes	$	37,119	$	31,689	$	5,430			17	%

Results for the Three Months Ended March 31, 2017

Commissions and fees. Commissions and fees increased during the three months ended March 31, 2017 compared to the prior year period primarily due to the growth in asset-based revenues reflecting higher average client asset values. Sales-based revenues also contributed to the increase in commissions and fees in 2017 as a result of higher product sales during the three months ended March 31, 2017 versus the comparable period in 2016. However, sales-based revenues did not increase as significantly as product sales mainly due to the change in sales mix to product offerings with lower sales commission rates. Account-based revenues grew primarily due to an increase in our account-based fee structure on U.S. qualified accounts implemented in the fourth quarter of 2016 as well as growth in the average number of fee-generating positions in mutual funds and managed accounts investments that are serviced on the Company’s recordkeeping and custodial services platform.

Sales commissions. The increase in sales- and asset-based commissions for the three months ended March 31, 2017 compared to the prior year period was generally consistent with the increase in sales- and asset-based revenues, respectively.

Other operating expenses. During three months ended March 31, 2017, other operating expenses increased compared to the prior year period primarily due to growth in asset-based operating expenses, the Primerica Advisors Lifetime Investment Platform launch, and higher technology platform costs.

Corporate and Other Distributed Products Segment Results. Corporate and Other Distributed Products segment results were as follows:

	Three months ended March 31,						Change
	2017			2016			$			%
	(Dollars in thousands)
Revenues:
Direct premiums	$	7,319		$	7,886		$	(567	)		(7	)%
Ceded premiums		(1,692	)		(2,063	)		(371	)		(18	)%
Net premiums		5,627			5,823			(196	)		(3	)%
Commissions and fees		6,060			5,987			73			1	%
Allocated investment income net of investment expenses		23,309			23,544			(235	)		(1	)%
Interest expense on surplus note		(5,718	)		(4,154	)		1,564			38	%
Allocated net investment income		17,591			19,390			(1,799	)		(9	)%
Realized investment gains (losses), including other-than-temporary impairment losses		134			(783	)		917		*
Other, net		1,294			1,169			125			11	%
Total revenues		30,706			31,586			(880	)		(3	)%
Benefits and expenses:
Benefits and claims		4,614			4,182			432			10	%
Amortization of DAC		(17	)		(15	)		2			13	%
Insurance expenses		1,904			2,101			(197	)		(9	)%
Insurance commissions		532			548			(16	)		(3	)%
Sales commissions		2,865			3,222			(357	)		(11	)%
Interest expense		7,127			7,173			(46	)		(1	)%
Other operating expenses		24,980			21,932			3,048			14	%
Total benefits and expenses		42,005			39,143			2,862			7	%
Loss before income taxes	$	(11,299	)	$	(7,557	)	$	3,742			50	%

*	Not meaningful.

Results for the Three Months Ended March 31, 2017

Total revenues. The decline in total revenues during the three months ended March 31, 2017 compared to the prior year period was largely driven by the decline in allocated net investment income as discussed earlier in “Total revenues” under the consolidated “Primerica, Inc. and Subsidiaries Results” section. In addition, net premiums declined modestly due to the run-off of the closed blocks of business issued by NBLIC. Commissions and fees on other distributed products remained consistent period over period.

Total benefits and expenses. Total benefits and expenses increased during the three months ended March 31, 2017 compared to the prior year period primarily due to higher employee-related expenses included in other operating expenses.

Financial Condition

Investments. Our insurance business is primarily focused on selling term life insurance, which does not include an investment component for the policyholder. The invested asset portfolio funded by premiums from our term life insurance business does not involve the substantial asset accumulations and spread requirements that exist with other non-term life insurance products. As a result, the profitability of our term life insurance business is not as sensitive to the impact that interest rates have on our invested asset portfolio and investment income as the profitability of other companies that distribute non-term life insurance products.

We follow a conservative investment strategy designed to emphasize the preservation of our invested assets and provide adequate liquidity for the prompt payment of claims. To meet business needs and mitigate risks, our investment guidelines provide restrictions on our portfolio’s composition, including limits on asset type, per issuer limits, credit quality limits, portfolio duration, limits on the amount of investments in approved countries and permissible security types. We also manage and monitor our allocation of investments to limit the accumulation of any disproportionate concentrations of risk among industry sectors or issuer countries outside of the U.S. and Canada. In addition, as of March 31, 2017, we did not hold any country of issuer concentrations outside of the U.S. or Canada that represented more than 5% of the fair value of our available-for-sale invested asset portfolio or any industry concentrations of corporate bonds that represented more than 10% of the fair value of our available-for-sale invested asset portfolio.

We may also direct our investment managers to invest some of our invested asset portfolio in currencies other than the U.S. dollar. For example, a portion of our portfolio is invested in assets denominated in Canadian dollars, which, at minimum, would equal our reserves for policies denominated in Canadian dollars. Additionally, to ensure adequate liquidity for payment of claims, we take into account the maturity and duration of our invested asset portfolio and our general liability profile.

We also hold within our invested asset portfolio a credit enhanced note (“LLC Note”) issued by a limited liability company owned by a third party service provider which is classified as a held-to-maturity security. The LLC Note, which is scheduled to mature on December 31, 2029, was obtained in exchange for the Surplus Note of equal principal amount issued by Vidalia Re, a special purpose

financial captive insurance company and wholly owned subsidiary of Primerica Life. For more information on the LLC Note, see Note 3 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.

We have an investment committee composed of members of our senior management team that is responsible for establishing and maintaining our investment guidelines and supervising our investment activity. Our investment committee regularly monitors our overall investment results and our compliance with our investment objectives and guidelines. We use a third-party investment advisor to assist us in the management of our investing activities. Our investment advisor reports to our investment committee.

Our invested asset portfolio is subject to a variety of risks, including risks related to general economic conditions, market volatility, interest rate fluctuations, liquidity risk and credit and default risk. Investment guideline restrictions have been established to minimize the effect of these risks but may not always be effective due to factors beyond our control. Interest rates are highly sensitive to many factors, including governmental monetary policies, domestic and international economic and political conditions and other factors beyond our control. A significant increase in interest rates could result in significant losses, realized or unrealized, in the value of our invested asset portfolio. Additionally, with respect to some of our investments, we are subject to prepayment and, therefore, reinvestment risk.

Details on asset mix (excluding our held-to-maturity security) were as follows:

	March 31, 2017		December 31, 2016
Average rating of our fixed-maturity portfolio	A-		A-
Average duration of our fixed-maturity portfolio	3.8 years		3.9 years
Average book yield of our fixed-maturity portfolio		4.18%		4.21%

The distribution of our investments in fixed-maturity securities (excluding our held-to-maturity security) by rating follows:

	March 31, 2017					December 31, 2016
	Amortized cost		%			Amortized cost		%
	(Dollars in thousands)
AAA	$	310,614		17	%	$	295,873		17	%
AA		169,099		9	%		161,594		9	%
A		385,622		22	%		387,072		23	%
BBB		819,173		46	%		798,156		46	%
Below investment grade		89,867		6	%		93,533		5	%
Not rated		7,088	*				5,838	*
Total	$	1,781,463		100	%	$	1,742,066		100	%

*	Less than 1%.

The ten largest holdings within our invested asset portfolio (excluding our held-to-maturity security) were as follows:

	March 31, 2017
Issuer	Fair value			Cost or amortized cost			Unrealized gain (loss)			Credit rating
	(Dollars in thousands)
Government of Canada	$	22,339		$	21,393		$	946		AAA
National Rural Utilities Cooperative		11,335			10,272			1,063		A
AT&T Inc.		10,232			9,272			960		A
General Electric Co		10,125			9,665			460		AA+
Wells Fargo & Co		9,393			8,799			594		A
Iberdrola SA		8,746			8,474			272		BBB+
National Fuel Gas Co		8,706			8,072			634		BBB
Province of Alberta Canada		8,527			8,417			110		AA+
American Airlines Group Inc. Collateralized Trusts		8,452			8,570			(118	)	AA-
Anheuser-Busch InBev SA/NV		8,169			7,782			387		A-
Total – ten largest holdings	$	106,024		$	100,716		$	5,308
Total – fixed-maturity and equity securities	$	1,891,402		$	1,818,358
Percent of total fixed-maturity and equity securities		6	%		6	%

For additional information on our invested asset portfolio, see Note 3 (Investments) to our unaudited condensed consolidated financial statements included elsewhere in this report.

Liquidity and Capital Resources

Dividends and other payments to the Parent Company from its subsidiaries are our principal sources of cash. The amount of dividends paid by the subsidiaries is dependent on their capital needs to fund future growth and applicable regulatory restrictions. The primary uses of funds by the Parent Company include the payments of stockholder dividends, interest on notes payable, general operating expenses, and income taxes, as well as repurchases of shares outstanding. At March 31, 2017, the Parent Company had cash and invested assets of approximately $81.5 million.

The Parent Company’s subsidiaries generate operating cash flows primarily from term life insurance premiums (net of premiums ceded to reinsurers), income from invested assets, commissions and fees collected from the distribution of investment and savings products as well as other financial products. The subsidiaries' principal operating cash outflows include the payment of insurance claims and benefits (net of ceded claims recovered from reinsurers), commissions to our independent sales force, insurance and other operating expenses, interest expense for future policy benefit reserves financing transactions, and income taxes.

The distribution and underwriting of term life insurance requires upfront cash outlays at the time the policy is issued as we pay a substantial majority of the sales commission during the first year following the sale of a policy and incur costs for underwriting activities at the inception of a policy’s term. During the early years of a policy's term, we generally receive level term premiums in excess of claims paid. We invest the excess cash generated during earlier policy years in fixed-maturity and equity securities held in support of future policy benefit reserves. In later policy years, cash received from the maturity or sale of invested assets is used to pay claims in excess of level term premiums received.

Historically, cash flows generated by our businesses, primarily from our existing block of term life policies and our investment and savings products, have provided us with sufficient liquidity to meet our operating requirements. We anticipate that cash flows from our businesses will continue to provide sufficient operating liquidity over the next 12 months.

We may seek to enhance our liquidity position or capital structure through borrowings from third-party sources, sales of debt or equity securities, reserve financings or some combination of these sources. Additionally, we believe that cash flows from our businesses and potential sources of funding will sufficiently support our long-term liquidity needs.

Cash Flows. The components of the change in cash and cash equivalents were as follows:

	Three months ended March 31,
	2017			2016
	(In thousands)
Net cash provided by (used in) operating activities	$	52,547		$	35,320
Net cash provided by (used in) investing activities		(33,741	)		47,967
Net cash provided by (used in) financing activities		(45,235	)		(61,278	)
Effect of foreign exchange rate changes on cash		215			1,414
Change in cash and cash equivalents	$	(26,214	)	$	23,423

Operating Activities. Cash flows from operating activities increased during the three months ended March 31, 2017 versus the three months ended March 31, 2016 largely due to higher cash receipts from the collection of premium revenues in excess of benefits and claims paid in our Term Life Insurance segment. The increase in direct premiums as well as the additional layering of net premiums from term life insurance policies not subject to the IPO coinsurance transactions has resulted in positive incremental cash flows after payments are made for policy acquisition costs during the first year that policies are issued. The year-over-year change in operating cash flows also was affected by lower payments in 2017 for multi-year service contracts covering software used in the normal course of business as compared with the prepayments made for these contracts in 2016. Partially offsetting the increase in operating cash flows was the quarter-over-quarter timing impact of higher payments for Canadian income taxes in 2017 as a result of differences in the amounts remitted for the Company’s estimated tax liability during the preceding fiscal year.

Investing Activities. Investing activity cash flows changed to a usage of cash in 2017 as compared with a source of cash in 2016. The Company had a lower amount of fixed maturity investments that matured during the first three months of 2017 versus the comparable period in 2016. Additionally, the Company used more cash to purchase investments in fixed-maturity securities in 2017 while more cash was used to finance common stock repurchases in 2016 as discussed under the “Financing Activities” description.

Financing Activities. The decrease in cash used in financing activities during the three months ended March 31, 2017 compared to the first three months of 2016 was primarily due to lower repurchases of common stock on a year-over-year basis. In 2016, the Company accelerated share repurchases under the share repurchase program in effect at that time given the reduced market price of its common stock during the period.

Risk-Based Capital (“RBC”). The National Association of Insurance Commissioners (“NAIC”) has established RBC standards for U.S. life insurers, as well as a risk-based capital model act (the “RBC Model Act”) that has been adopted by the insurance regulatory authorities. The RBC Model Act requires that life insurers annually submit a report to state regulators regarding their RBC based upon four categories of risk: asset risk; insurance risk; interest rate risk; and business risk. The capital requirement for each is determined by applying factors that vary based upon the degree of risk to various asset, premiums and policy benefit reserve items. The formula is an early warning tool to identify possible weakly capitalized companies for purposes of initiating further regulatory action.

As of March 31, 2017, our U.S. life insurance subsidiaries had statutory capital substantially in excess of the applicable statutory requirements to support existing operations and to fund future growth. Primerica Life’s RBC ratio remained well positioned to support existing operations and fund future growth.

In Canada, an insurer’s minimum capital requirement is overseen by the Office of the Superintendent of Financial Institutions (“OSFI”) and determined as the sum of the capital requirements for five categories of risk: asset default risk; mortality/morbidity/lapse risks;

changes in interest rate environment risk; segregated funds risk; and foreign exchange risk. As of March 31, 2017, Primerica Life Canada was in compliance with Canada’s minimum capital requirements as determined by OSFI.

Redundant Reserve Financings. The Model Regulation entitled Valuation of Life Insurance Policies, commonly known as Regulation XXX, requires insurers to carry statutory policy benefit reserves for term life insurance policies with long-term premium guarantees which are often significantly in excess of the future policy benefit reserves that insurers deem necessary to satisfy claim obligations ("redundant policy benefit reserves"). Accordingly, many insurance companies have sought ways to reduce their capital needs by financing redundant policy benefit reserves through bank financing, reinsurance arrangements and other financing transactions.

We have established Peach Re, Inc. ("Peach Re") and Vidalia Re as special purpose financial captive insurance companies and wholly owned subsidiaries of Primerica Life. Primerica Life has ceded certain term life policies issued prior to 2011 to Peach Re as part of a Regulation XXX redundant reserve financing transaction (the “Peach Re Redundant Reserve Financing Transaction”) and has ceded certain term life policies issued in 2011, 2012, 2013 and 2014 to Vidalia Re as part of a Regulation XXX redundant reserve financing transaction (the “Vidalia Re Redundant Reserve Financing Transaction”). These redundant reserve financing transactions allow us to more efficiently manage and deploy our capital. The NAIC has adopted a model regulation for determining reserves using a principle-based approach (“principle-based reserves” or “PBR”), which is designed to reflect each insurer’s own experience in calculating reserves and move away from a standardized reserving formula. PBR has been adopted by almost all state insurance departments effective in 2017, but has not yet been adopted by Massachusetts or New York, where two of our U.S. insurance subsidiaries are domiciled. If adopted, the new principle-based reserve regulation will greatly reduce the statutory policy benefit reserve requirements, but will only apply for business issued after the effective date. We anticipate expanding our existing redundant reserve financing transactions for business sold after 2014 and prior to the effective date of any principle-based reserve regulation. See Note 10 (Commitments and Contingent Liabilities), Note 3 (Investments), Note 12 (Debt), and Note 13 (Subsequent Events) to our unaudited condensed consolidated financial statements included elsewhere in this report for more information on these redundant reserve financing transactions.

Notes Payable. The Company has $375.0 million of publicly-traded, Senior Notes outstanding with an annual interest rate of 4.75%, payable semi-annually in arrears on January 15 and July 15. The Senior Notes mature July 15, 2022.

We were in compliance with the covenants of the Senior Notes at March 31, 2017. No events of default(s) occurred during the three months ended March 31, 2017.

Rating Agencies. There have been no changes to Primerica, Inc.'s Senior Notes ratings or Primerica Life's financial strength ratings since December 31, 2016.

Short-Term Borrowings. We had no short-term borrowings as of or during the three months ended March 31, 2017.

Surplus Note. Vidalia Re issued the Surplus Note in exchange for the LLC Note as a part of the Vidalia Re Redundant Reserve Financing Transaction. The Surplus Note has a principal amount equal to the LLC Note and is scheduled to mature on December 31, 2029. For more information on the Surplus Note, see Note 12 (Debt) to our unaudited condensed consolidated financial statements included elsewhere in this report.

Off-Balance Sheet Arrangements. Our off-balance sheet arrangements as of March 31, 2017 consisted of the letter of credit issued under the credit facility agreement with Deutsche Bank (the “Credit Facility Agreement”) and associated with the Peach Re Redundant Reserve Financing Transaction as described in Note 10 (Commitments and Contingent Liabilities) to our unaudited condensed consolidated financial statements included elsewhere in this report.

Contractual Obligations Update. There has been no material changes in contractual obligations from those disclosed in the 2016 Annual Report.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Investors are cautioned that certain statements contained in this report as well as some statements in periodic press releases and some oral statements made by our officials during our presentations are “forward-looking” statements. Forward-looking statements include, without limitation, any statement that may project, indicate or imply future results, events, performance or achievements, and may contain the words “expect”, “intend”, “plan”, “anticipate”, “estimate”, “believe”, “will be”, “will continue”, “will likely result”, and similar expressions, or future conditional verbs such as “may”, “will”, “should”, “would”, and “could.” In addition, any statement concerning future financial performance (including future revenues, earnings or growth rates), ongoing business strategies or prospects, and possible actions taken by us or our subsidiaries are also forward-looking statements. These forward-looking statements involve external risks and uncertainties, including, but not limited to, those described under the section entitled “Risk Factors” included herein.

Forward-looking statements are based on current expectations and projections about future events and are inherently subject to a variety of risks and uncertainties, many of which are beyond the control of our management team. All forward-looking statements in this report and subsequent written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these risks and uncertainties. These risks and uncertainties include, among others:

•

our failure to continue to attract new recruits, retain sales representatives or license or maintain the licensing of our independent sales representatives would materially adversely affect our business, financial condition and results of operations;

•

there are a number of laws and regulations that could apply to our distribution model, which could require us to modify our distribution structure;

•

there may be adverse tax, legal or financial consequences if the independent contractor status of our independent sales representatives is overturned;

•

the Company’s or its independent sales representatives' violation of, or non-compliance with, laws and regulations and related claims and proceedings could expose us to material liabilities;

•

any failure to protect the confidentiality of client information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations;

•

we may face significant losses if our actual experience differs from our expectations regarding mortality or persistency;

•

the occurrence of a catastrophic event could materially adversely affect our business, financial condition and results of operations;

•

our insurance business is highly regulated, and statutory and regulatory changes may materially adversely affect our business, financial condition and results of operations;

•

a decline in the regulatory capital ratios of our insurance subsidiaries could result in increased scrutiny by insurance regulators and ratings agencies and have a material adverse effect on our business, financial condition and results of operations;

•

a significant ratings downgrade by a ratings organization could materially adversely affect our business, financial condition and results of operations;

•

the failure by any of our reinsurers or reserve financing counterparties to perform its obligations to us could have a material adverse effect on our business, financial condition and results of operations;

•

our Investment and Savings Products segment is heavily dependent on mutual fund and annuity products offered by a relatively small number of companies, and, if these products fail to remain competitive with other investment options or we lose our relationship with one or more of these companies, our business, financial condition and results of operations may be materially adversely affected;

•

the Company’s or its securities-licensed independent sales representatives' violations of, or non-compliance with, laws and regulations could expose us to material liabilities;

•

if heightened standards of conduct or more stringent licensing requirements, such as those proposed by the Securities and Exchange Commission and those adopted by the Department of Labor, are imposed on us or our independent sales representatives, or selling compensation is reduced as a result of new legislation or regulations, it could have a material adverse effect on our business, financial condition and results of operations;

•

if our suitability policies and procedures were deemed inadequate, it could have a material adverse effect on our business, financial condition and results of operations;

•

our sales force support tools may fail to appropriately identify financial needs or suitable investment products;

•

non-compliance with applicable regulations could lead to revocation of our subsidiary's status as a non-bank custodian;

•

as our securities sales increase, we become more sensitive to performance of the equity markets;

•

credit deterioration in, and the effects of interest rate fluctuations on, our invested asset portfolio and other assets that are subject to changes in credit quality and interest rates could materially adversely affect our business, financial condition and results of operations;

•

valuation of our investments and the determination of whether a decline in the fair value of our invested assets is other-than-temporary are based on estimates that may prove to be incorrect;

•

changes in accounting standards can be difficult to predict and could adversely impact how we record and report our financial condition and results of operations;

•

the effects of economic down cycles in the United States and Canada could materially adversely affect our business, financial condition and results of operations;

•

we are subject to various federal, state and provincial laws and regulations in the United States and Canada, changes in which or violations of which may require us to alter our business practices and could materially adversely affect our business, financial condition and results of operations;

•

litigation and regulatory investigations and actions may result in financial losses and harm our reputation;

•

the current legislative and regulatory climate with regard to financial services may adversely affect our business, financial condition, and results of operations;

•

the inability of our subsidiaries to pay dividends or make distributions or other payments to us in sufficient amounts would impede our ability to meet our obligations and return capital to our stockholders;

•

a significant change in the competitive environment in which we operate could negatively affect our ability to maintain or increase our market share and profitability;

•

the loss of key employees and sales force leaders could negatively affect our financial results and impair our ability to implement our business strategy;

•

if one of our significant information technology systems fails, if its security is compromised, or if the Internet becomes disabled or unavailable, our business, financial condition and results of operations may be materially adversely affected;

•

the current legislative and regulatory climate with regard to cybersecurity may adversely affect our business, financial condition, and results of operations;

•

in the event of a disaster, our business continuity plan may not be sufficient, which could have a material adverse effect on our business, financial condition and results of operations;

•

we may be materially adversely affected by currency fluctuations in the United States dollar versus the Canadian dollar; and

•

the market price of our common stock may fluctuate.

Developments in any of these areas could cause actual results to differ materially from those anticipated or projected or cause a significant reduction in the market price of our common stock.

The foregoing list of risks and uncertainties may not contain all of the risks and uncertainties that could affect us. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. Accordingly, undue reliance should not be placed on these statements. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, except as otherwise required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There have been no material changes in our exposures to market risk since December 31, 2016. For details on the Company's interest rate, foreign currency exchange, and credit risks, see "Item 7A. Quantitative and Qualitative Information About Market Risks" in our 2016 Annual Report.

ITEM 4. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report (the “Evaluation Date”). Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the first quarter of 2017 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We are involved from time to time in legal disputes, regulatory inquiries and arbitration proceedings in the normal course of business. Additional information regarding certain legal proceedings to which we are a party is described under “Contingent Liabilities” in Note 10 (Commitments and Contingent Liabilities) to our unaudited condensed consolidated financial statements included elsewhere in this report, and such information is incorporated herein by reference. As of the date of this report, we do not believe any pending legal proceeding to which Primerica or any of its subsidiaries is a party is required to be disclosed pursuant to this item.

ITEM 1A. RISK FACTORS.

The following supplements and amends the Risk Factors contained in our Annual Report on Form 10-K for the year ended December 31, 2016, which are incorporated herein by reference.

If heightened standards of conduct or more stringent licensing requirements, such as those proposed by the Securities and Exchange Commission (“SEC”) and those adopted by the Department of Labor (“DOL”), are imposed on us or our independent sales representatives, or selling compensation is reduced as a result of new legislation or regulations, it could have a material adverse effect on our business, financial condition and results of operations.

Our independent U.S. sales representatives are subject to federal and state regulation as well as state licensing requirements. PFS Investments, which is regulated as a broker-dealer, and our independent U.S. sales representatives are currently subject to general anti-fraud limitations under the Exchange Act and SEC rules and regulations, as well as other conduct standards prescribed by the Financial Industry Regulatory Authority (“FINRA”). These standards generally require that broker-dealers and their sales representatives disclose conflicts of interest that might affect the advice or recommendations they provide and require them to make suitable investment recommendations to their customers. In January 2011 under the authority of the Dodd-Frank Act, which gives the SEC the power to impose on broker-dealers a heightened standard of conduct that is currently applicable only to investment advisers, the SEC staff submitted a report to Congress in which it recommended that the SEC adopt a fiduciary standard of conduct for broker-dealers that is uniform with that of investment advisors. The SEC has slated the rule on its regulatory agenda for “long-term action” without a specific timetable.

On April 8, 2016, the DOL published a final rule (the “DOL Fiduciary Rule”), which more broadly defines the circumstances under which a person or entity may be considered a fiduciary for purposes of the prohibited transaction rules of the Employee Retirement Income Security Act and Internal Revenue Code (“IRC”) Section 4975. IRC Section 4975 prohibits certain types of compensation paid by third parties with respect to transactions involving assets in qualified accounts, including IRAs. Simultaneously with publication of the DOL Fiduciary Rule, the DOL issued new, and amended existing, exemptions intended, among other things, to allow advisers and their firms to continue to receive common forms of compensation that would otherwise be prohibited due to the DOL Fiduciary Rule, provided the conditions of the exemptions are met. On February 3, 2017, the President of the United States issued a memorandum directing the DOL to review the DOL Fiduciary Rule and the exemptions to determine, based on certain factors, whether they should be revised or rescinded. The DOL Fiduciary Rule and transitional exemptions are scheduled to become applicable on June 9, 2017, with the final exemptions scheduled to go into effect on January 1, 2018, though either or both of these dates could be delayed. The DOL has stated that it will conduct the review and make the determinations directed by the President during the transition period from June 9, 2017 until January 1, 2018.

If the DOL Fiduciary Rule and the final exemptions were to become applicable without revisions, we believe that certain changes to our qualified plan business would be needed in order for us to continue to help investors save for retirement. Though we plan to make some modifications to our sales processes beginning on June 9, 2017, because of the uncertainty of the status of the DOL Fiduciary Rule and the final exemptions, we cannot determine the extent and nature of the changes we ultimately will make. Additionally, we have not determined the extent to which we would make necessitated compensation, product or other changes to our qualified investment and savings plan business, nor whether we would make such changes consistent across our non-qualified investment and savings business. While we have incurred, and would expect to continue to incur, increased costs, we cannot quantify the collective impact of those costs and other changes on the Company. IRAs and other qualified accounts are a core component of the Investment and Savings Products segment of our business and accounted for a significant portion of the total revenue of this segment for the year ended December 31, 2016. Changes resulting from the DOL Fiduciary Rule could make it more difficult for us and our independent sales representatives to profitably serve the middle-income market and could result in a reduction in the number of IRAs and qualified accounts that we serve, which could materially adversely affect the amount of revenue that we generate from this line of business and ultimately could result in a decline in the number of our securities-licensed sales representatives.

Heightened standards of conduct as a result of either of the above items or another similar proposed rule or regulation could also increase the compliance and regulatory burdens on our independent representatives, and could lead to increased litigation and regulatory risks, changes to our business model, a decrease in the number of our securities-licensed representatives and a reduction in the products we offer to our clients, any of which could have a material adverse effect on our business, financial condition and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During the quarter ended March 31, 2017, we repurchased shares of our common stock as follows:

Period	Total number of shares purchased⁽¹⁾		Average price paid per share⁽¹⁾		Total number of shares purchased as part of publicly announced plans or programs		Approximate dollar value of shares that may yet be purchased under the plans or programs⁽²⁾
January 1-31, 2017		101,976	$	72.27		101,728	$	192,647,100
February 1-28, 2017		120,536		78.60		120,536		183,172,970
March 1-31, 2017		257,907		81.12		160,393		170,149,058
Total		480,419	$	78.61		382,657	$	170,149,058

⁽¹⁾	Consists of (a) repurchases of 97,762 shares at an average price of $80.95 arising from share-based compensation tax withholdings and stock option exercises and (b) open market repurchases of shares under the share repurchase program approved by our Board of Directors.

⁽²⁾ In November 2016, the Company's Board of Directors authorized $200.0 million of share repurchases through June 30, 2018.

For information regarding year-to-date share repurchases, refer to Note 7 (Stockholders' Equity) to our unaudited condensed consolidated financial statements included elsewhere in this report.

ITEM 6. EXHIBITS.

The agreements included as exhibits to this report are included to provide you with information regarding the terms of these agreements and are not intended to provide any other factual or disclosure information about the Company or its subsidiaries, our business or the other parties to these agreements. These agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•

have been qualified by disclosures that were made to the other party in connection with the negotiation of the application agreement, which disclosures are not necessarily reflected in the agreement;

•

may apply standards of materiality in a way that is different from what may be viewed as material to our investors; and

•

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time, and should not be relied upon by investors.

Exhibit Number	Description	Reference	Exhibit Hyperlink
31.1	Rule 13a-14(a)/15d-14(a) Certification, executed by Glenn J. Williams, Chief Executive Officer.	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	pri-ex311_8.htm
31.2	Rule 13a-14(a)/15d-14(a) Certification, executed by Alison S. Rand, Executive Vice President and Chief Financial Officer.	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	pri-ex312_6.htm
32.1	Certifications required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. 1350), executed by Glenn J. Williams, Chief Executive Officer, and Alison S. Rand, Executive Vice President and Chief Financial Officer.	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	pri-ex321_7.htm
101.INS	XBRL Instance Document(1)	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a
101.SCH	XBRL Taxonomy Extension Schema	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a
101.CAL	XBRL Taxonomy Extension Calculation Linkbase	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a
101.DEF	XBRL Taxonomy Extension Definition Linkbase	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a
101.LAB	XBRL Taxonomy Extension Label Linkbase	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a
101.PRE	XBRL Taxonomy Extension Presentation Linkbase	Filed with the Securities and Exchange Commission as part of this Quarterly Report.	n/a

⁽¹⁾

Includes the following materials contained in this Quarterly Report on Form 10-Q for the period ended March 31, 2017, formatted in XBRL: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Primerica, Inc.

May 10, 2017	/s/ Alison S. Rand
	Alison S. Rand
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)