Primerica, Inc. (PRI) Q4 2022 Earnings Call Transcript

Primerica, Inc. (NYSE:PRI) Q4 2022 Earnings Conference Call February 24, 2023 10:00 AM ET

Company Participants

Nicole Russell - SVP, IR

Glenn Williams - CEO & Director

Alison Rand - EVP & CFO

Conference Call Participants

Andrew Kligerman - Crédit Suisse

Daniel Bergman - Jefferies

Ryan Krueger - KBW

Operator

Greetings. Welcome to Primerica's Fourth Quarter 2020 Earnings Conference Call. [Operator Instructions]. I want to manus nan convention complete to Nicole Russell, Senior Vice President of Investor Relations. Nicole, you whitethorn now begin.

Nicole Russell

Thank you, Rob, and bully morning, everyone. Welcome to Primerica's Fourth Quarter Earnings Call. A transcript of our net property merchandise on pinch materials applicable to today's telephone are posted connected nan Investor Relations conception of our website.

Joining our telephone coming are our Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Alison Rand. Glenn and Alison will present prepared remarks, and past we will unfastened nan telephone up for questions.

During our call, immoderate of our comments whitethorn incorporate forward-looking statements successful accordance pinch nan safe harbor provisions of nan Securities Litigation Reform Act. The institution assumes nary responsibility to update these statements to bespeak caller information. We mention you to our astir caller Form 10-K filing arsenic whitethorn beryllium modified by consequent Forms 10-Q for a database of risks and uncertainties that could origin existent results to materially disagree from those expressed aliases implied. We will besides reference definite non-GAAP measures during this call, which we judge supply further penetration into nan company's operations. Reconciliations of non-GAAP measures to their respective GAAP numbers are included astatine nan extremity of our net property merchandise and are disposable connected our Investor Relations website.

I would now for illustration to move nan telephone complete to Glenn.

Glenn Williams

Thank you, Nicole, and thanks, everyone, for joining america today. At Primerica, 2022 was a twelvemonth of advancement arsenic we adjusted to a post-COVID situation and precocious our position arsenic 1 of nan largest providers of financial acquisition and guidance to middle-income families successful nan U.S. and Canada. Among our proudest achievements successful 2022 was issuing complete $100 cardinal of word life security protection for nan 3rd consecutive year, bringing our full look magnitude successful unit to $917 cardinal astatine year-end. In our ISP business, our finance licensed reps play an important domiciled successful helping their clients enactment focused connected semipermanent goals. Despite important marketplace volatility and economical uncertainty, our clients proceed to invest, contributing $10 cardinal successful caller income during 2022, and making this our 2nd largest income year, exceeding prepandemic levels by much than 30%.

At year-end, our life licence income unit exceeded 135,000 representatives, providing a coagulated foundation, from which we tin proceed to meet nan needs of our clients. Our occurrence reflects nan worth that middle-income families spot connected protecting their income, redeeming for nan early and nan use of doing truthful successful a face-to-face mounting pinch a Primerica representative.

Turning our attraction to 4th fourth results. Adjusted operating revenues of $685 cardinal declined 5% year-over-year owed to nan antagonistic effect of marketplace volatility connected customer plus values and little revenue-generating finance merchandise sales. Pressure from our ISP conception was offset by beardown Term Life conception results, driven by debased benefits and claims ratio, while nan Senior Health business contributed $4 cardinal to pretax income. Diluted adjusted operating income per stock grew 19% year-over-year to $3.49, and ROAE was very beardown astatine 27.1%. Alison will supply much specifications connected 4th fourth financial results later successful nan call.

Our distribution building capabilities stay strong. More than 77,000 individuals joined Primerica during nan 4th quarter, representing a 5% summation year-over-year arsenic we proceed to capitalize connected nan attractiveness and elasticity of our entrepreneurial opportunity. Our occurrence done various disruptions successful caller years, and our efforts to amended section support and technology, person further strengthened Primerica's entreaty pinch caller recruits. We are gaining traction successful licensing and person made bully advancement passim nan year. During nan 4th fourth of 2022, much than 11,000 individuals obtained a caller life security license, which represents a 20% summation compared to nan aforesaid play successful nan anterior year.

Licensing is ever nan astir difficult portion of building distribution. It takes changeless attraction to negociate nan process, which varies by authorities and province. We person made nan improvements to nan licensing process complete nan past fewer years to region arsenic galore symptom points arsenic possible, and we proceed to pass nan value of licensing caller recruits to our section leaders. As always, we stay committed to increasing nan size of our income force, and we ended nan twelvemonth pinch 135,208 life licensed income reps, which represents a 4.4% summation year-over-year. Looking ahead, we expect nan income unit to turn astatine astir 3% successful 2023.

Turning adjacent to nan 4th fourth Term Life conception results. Issued policies were down 4% year-over-year owed to a slow commencement successful October arsenic reps anticipated and prepared for nan motorboat of our caller procreation of security products. Following a successful merchandise launch, we started to spot improved income volumes successful November and December. We besides judge nan accrued costs of surviving negatively impacted income to immoderate grade during nan period.

Productivity astatine 0.18 policies per life licence rep per period remained wrong our humanities range. One of nan changes we made to our caller merchandise bid impact really policies are system successful narration to individual lives. Historically, 2 big lives could beryllium covered nether a azygous argumentation by adding a spouse rider. The usage of this rider has dramatically decreased complete time. Just anterior to nan motorboat of nan caller products successful October, only 15% of issued policies included a spouse rider.

To amended lucifer consequence and pricing successful our caller merchandise series, we eliminated this rider truthful that going forward, each argumentation will screen only a azygous life. Given nan timing of nan caller merchandise motorboat and nan clip required to complete nan underwriting process, astir 2/3 of policies issued successful nan 4th fourth were from nan aged merchandise series. Results for nan 4th reflected further policies issued owed to replacing nan spouse rider pinch a abstracted argumentation successful nan caller merchandise series.

Adjusting to a accordant ground of lives per policy, issued policies would beryllium down astir 7% for nan quarter. Beginning pinch 2023, virtually each policies issued will beryllium from nan caller merchandise bid pinch a azygous life per policy. To make 2023 year-over-year comparisons easier and much consistent, we will supply an estimate of 2022 issued lives by 4th successful our first 4th 2023 financial supplement on pinch nan historically reported issued policies. The alteration successful narration betwixt lines and policies will besides modestly alteration our productivity scope to 0.20 to 0.24 policies per life licensed representatives per period going guardant versus our humanities scope of 0.18 to 0.22. As we look ahead, we judge nan caller merchandise bid will supply momentum for maturation while inflationary pressures will apt stay a headwind successful nan adjacent term, starring to a slow commencement to 2023. We judge momentum build arsenic nan twelvemonth progresses. We expect first 4th income to turn astir 1% versus an adjusted argumentation count of astir $83,000 successful nan anterior twelvemonth period.

Our existent anticipation is that afloat twelvemonth 2023 Term Life issued policies will summation by mid-single digits compared to nan 2022 adjusted argumentation count of astir 33,000.

Turning to nan Investment and Savings Products segment. Prolonged equity marketplace volatility proceed to unit ISP results. Sales were $2.1 cardinal during nan 4th quarter, declining 31% from a very beardown 4th fourth successful nan anterior twelvemonth and ending customer plus values declined 14% year-over-year to astir $84 billion. However, nett flows remained affirmative astatine $649 cardinal for nan quarter, which we judge compares very favorably to manufacture trends. Clients stay committed to their semipermanent finance goals, and we proceed to spot beardown transaction volumes and small alteration successful automatic monthly investments, which comprise astir 1/4 of communal money sales.

Likewise, we person not seen a notable emergence successful nan quarterly redemption complaint during 2022. Ongoing marketplace volatility and uncertain economical conditions do put unit connected our larger waste and acquisition activity. We've historically seen these clients wanting to spot a play of marketplace betterment earlier reengaging successful nan market, making it difficult to task income for 2023. Taking into information nan existent marketplace conditions and nan very beardown first 4th income past year, we judge year-over-year ISP income to beryllium down arsenic overmuch arsenic 25% successful nan first 4th of 2023. We expect that our licence representatives will proceed to play an important domiciled successful acquisition and keeping clients focused connected nan extremity of a much financially unafraid future, while improvements successful CRM exertion and apps specified arsenic MyPrimerica let clients and reps to get accusation and enactment connected successful existent time.

In our Senior Health segment, approved policies were down 35% compared to nan 2021 AEP arsenic a consequence of deliberately slowing elder wellness sales, while we underwent efforts to amended taxation and stabilize LTVs. Our attraction has been connected producing accrued supplier efficiency, driving a revised lead buying strategy and revising supplier inducement compensation. These efforts, mixed pinch reducing our worker Senior Health supplier count by astir 50%, resulted successful a meaningful betterment successful supplier productivity compared to 2021 AEP. Productivity accrued connected mean 25% crossed each Asia tenure bands. The ratio of approved to submitted policies was 90%, which is an betterment complete nan 4th fourth of 2021.

Contract acquisition costs per approved argumentation besides declined 21% year-over-year to $722. As it relates to LTVs per approved policy, nan $888 recognized successful nan 4th fourth reflects our existent champion estimate of early committee collections connected a constrained basis. We'll person a amended knowing of really 2022 AEP business performed arsenic good arsenic 2023 renewal levels by nan extremity of nan first 4th and will set early LTVs arsenic necessary.

We're encouraged by nan emerging results nan Senior Health business is producing, and we admit there's overmuch activity still to do. Our corporate efforts are moving toward achieving a sustainable and patient business that will nutrient acceptable returns. We are besides committed to nan semipermanent opportunity successful nan owe business and proceed to execute against our scheme to grow our scope by gradually adding much states and expanding nan number of owe licence representatives. However, nan existent liking complaint situation continues to put unit connected indebtedness volumes. As we look to 2023, we do truthful pinch assurance successful our expertise to turn nan income unit and bring worth to underserved middle-income families.

We're encouraged by nan consequence to our caller Term Life products arsenic good arsenic nan emerging trends successful nan Senior Health business. Market volatility and economical uncertainty whitethorn proceed to origin headwinds, particularly successful our ISP business. We cognize nan basal spot successful our ISP business, which is focused connected semipermanent status savings, will continue. We person a precocious grade of assurance successful our expertise to create semipermanent stockholder value.

Now I'll move it complete to Alison.

Alison Rand

Thank you, Glenn, and bully morning, everyone. My prepared remarks coming will screen 4th fourth conception operating results, nan implications of nan take of long-duration targeted betterment aliases LDTI, and our 2023 outlook for cardinal financial measures.

Starting pinch nan Term Life segment. Operating revenues of $430 cardinal during nan 4th grew 5% year-over-year, chiefly driven by 6% maturation successful adjusted nonstop premiums, while pretax income grew 23%. Benefits and claims were a important driver of Term Life pretax income growth, outpacing gross 4th fourth owed to weaker seasonal persistency was 56.6% versus 63% successful nan anterior twelvemonth period. A fewer discrete items impacted each period. The astir important was $3 cardinal of favorable claims knowledgeable this 4th compared to $19 cardinal of excess claims successful nan anterior twelvemonth period, mostly related to COVID.

We property little claims activity this 4th to normal volatility. And while it's imaginable that we are seeing immoderate use of COVID mortality propulsion forward, location was thing conclusive and we cannot opportunity whether this will proceed successful 2023.

The 4th besides included a $4 cardinal simplification to reserves, reflecting nan affirmative effect of rising liking rates erstwhile we locked successful caller business assumptions during nan existent 4th for policies issued successful 2022.

Finally, we recognized a $2 cardinal favorable effect from nan administrative reprocessing of definite reinsurance transactions.

Turning adjacent to GAAP. The 4th fourth 2022 DAC amortization ratio of 1.6% reflected weaker seasonal persistency, while nan anterior twelvemonth play ratio of 13.1% benefited from nan tailwind of little lapse rates during nan pandemic. By nan extremity of 2022, persistency had mostly normalized successful nan aggregate, though we were still seeing higher lapses connected policies issued astatine nan deed of nan pandemic, offset by favorable persistency connected policies issued anterior to 2020.

Overall, connected a afloat twelvemonth basis, nan Term Life operating separator remained mostly unchanged astatine 19.6% versus 19.5% successful 2021. As we move to 2023, humanities results for 2021 and 2022 will beryllium restated to bespeak LDTI, which became effective connected January 1, 2023, pinch a modulation day of January 1, 2021.

While LDTI has nary effect connected nan underlying economics of our business, rate flows, statutory superior requirements aliases our expertise to return superior to stockholders, it does alteration really GAAP profits emerge.

As I supply a 2023 outlook for cardinal financial capacity metrics connected an LDTI basis, I will do truthful successful nan discourse of what we expect those aforesaid metrics to look for illustration for 2022 nether LDTI. All early year-over-year comparisons will beryllium provided connected an LDTI ground only. We scheme to people an updated 4th fourth financial supplement pinch restated unaudited 2022 results anterior to releasing [indiscernible] 4th results. The caller accounting lit does not effect nan nickname of nett premiums aliases adjusted nonstop premiums. Assuming nan mid-single-digit income maturation Glenn discussed earlier, we expect ADP to turn by astir 6% successful 2023. ADP maturation is predictable fixed nan size and stableness of our imports premium base. Additionally, our very celebrated expanding use rider, which allows policyholders to summation look magnitude sum by 10% each twelvemonth for a play of 10 years, acts arsenic a buffer against immoderate short-term antagonistic deviations successful sales.

Both DAC amortization and nan use successful claims arsenic a percent of ADP will beryllium little nether nan caller accounting literature. Starting pinch DAC, deferrable expenses do not alteration nether LDTI, but we expect DAC to amortize slower than it did nether nan erstwhile accounting literature. Under LDTI, amortization will beryllium recognized consecutive statement based connected a cohort existent look amount. A cohort includes each policies issued successful nan twelvemonth arsenic good arsenic policies that participate extremity of word aft their first level word period. Historically, DAC was amortized complete nan level premium paying play only, but LDTI's usage of cohorts successful existent look magnitude fundamentally decreases nan gait of amortization. The curen of commissions connected nan expanding use rider I conscionable discussed besides slows DAC amortization.

Under humanities GAAP, nan level commissions connected these riders were capitalized and amortized successful nan aforesaid period, whereas nether LDTI, they are amortized consecutive statement for illustration different acquisition costs. We expect nan afloat twelvemonth '23 DAC amortization ratio to beryllium astir 12% of adjusted nonstop premiums, and therefore, nan ratio successful 2022 nether LDTI to beryllium very similar. Additionally, nan usage of cohorts and existent look magnitude will mostly destruct nan persistency-related quarterly variability knowledgeable nether humanities GAAP. Separately, LDTI will besides destruct volatility successful nan Canadian segregated money DAC amortization that is recorded successful nan ISP segment. Segregated money DAC amortization will now beryllium based connected argumentation count arsenic opposed to estimated gross profit, which were taxable to market-driven changes connected customer plus values.

Moving to benefits and claims. We expect nan ratio to beryllium modestly little nether LDTI. Historically, use reserve assumptions were mislaid successful that rumor were not updated for early presumption changes specified arsenic mortality improvements, and included provisions for adverse deviation. Under LDTI, existent DAC estimates are utilized each period, which are mostly little than what was utilized nether humanities GAAP. We expect nan benefits and claims ratio to beryllium successful nan 58% scope of ADP successful 2023, and for nan 2022 restated scope nether LDTI to beryllium similar.

The benefits and claims ratio should beryllium reasonably unchangeable from quarter-to-quarter. Experience variances, which hap erstwhile existent rate flows for a cohort from expected rate flows underlying reserves, will beryllium partially recognized successful nan existent play and partially dispersed to early periods, whereas nether humanities GAAP, acquisition variances were mostly afloat recognized successful nan play incurred. The person we are to nan modulation date, nan much nan acquisition variance will beryllium dispersed to early years since each adjustments are applied prospectively from nan day of modulation nether nan modified retrospective take attack we are using.

LDTI requires assumptions underlying reserves to beryllium updated arsenic basal to existent champion estimate astatine slightest annually. Any presumption alteration would besides beryllium applied prospectively from nan modulation date, but would apt use to much cohorts than a circumstantial acquisition range, and could create much net volatility. Given nan homogenous and predictable quality of our business, and our important usage of reinsurance, we do not expect ample aliases predominant presumption changes to occur.

Upon take of nan caller standard, we will beryllium required to remeasure nan use reserves each 4th utilizing existent observable marketplace rates based connected an A rating. The quality betwixt reserves nether these rates and nan rates that were locked successful astatine nan clip of rumor will beryllium reflected successful AOCI. As of nan January 1, 2021 modulation date, we estimate that AOCI will beryllium reduced by $1.2 cardinal to $1.5 cardinal nett of income taxes. However, fixed nan drastic summation successful marketplace rates since then, we estimate nan effect to AOCI astatine nan modulation day would person been betwixt antagonistic $150 cardinal and affirmative $150 million, existent observable marketplace rate.

Given that we are utilizing nan modified retrospective take approach, nan opening DAC and reserve balances connected January 1, 2021, will beryllium nan aforesaid arsenic historically reported. There is 1 objection that impacts an isolated group of older cohorts, and is expected to trim opening retained net by little than $50 million. While location will beryllium nary effect to nett finance income connected a consolidated basis, we scheme to alteration really it is allocated crossed segments. We presently allocate nett finance income to nan Term Life conception specified that it offsets nan nett liking accreted to early argumentation use reserves little DAC. The remainder is reflected successful firm and other. Since liking is nary longer accretive to DAC nether LDTI, and since we do not see finance income to beryllium a cardinal driver of Term Life earnings, we scheme to grounds 100% of nett finance income successful nan Corporate and Other conception going forward. Restated humanities results will beryllium presented connected this ground accordingly.

Overall, we expect nan 2022 Term Life operating margin, excluding allocated nett finance income, to beryllium astir 23%, and nan expected separator for 2023 will besides beryllium astir -- I americium sorry, 2022 and 2023 will some beryllium astir 23%. We judge nan tenants of LDTI reenforce nan predictable quality of our Term Life earnings.

Turning to nan Investment Savings Products segment. Market volatility and economical uncertainty proceed to create headwinds successful nan segment's results. Operating revenues of $198 cardinal and pretax income of $57 cardinal declined 20% and 19%, respectively, driven by 35% little sales-based gross generating income and 12% little mean customer plus value. Sales guidelines and plus based committee gross and expenses mostly declined successful statement pinch their respective drivers. Note that nan sales-based nett gross ratio was little successful nan anterior twelvemonth play arsenic we recorded a $4 cardinal [indiscernible] income unit bonuses. On a afloat twelvemonth basis, nan sales-based nett gross ratio is accordant year-over-year.

Equity marketplace volatility makes it very difficult to forecast 2023 ISP income and customer plus value. As a bully norm of thumb, you tin estimate that a $100 cardinal alteration successful sales-based gross generating income translates to astir a $1 cardinal alteration successful sales-based nett gross annually, while -- excuse me, not without income lease nett revenue. While nan $1 cardinal alteration successful mean customer plus values translates to astir a $2 cardinal alteration successful asset-based nett revenues annually.

Senior Health's 4th fourth operating revenues were $28 cardinal versus $38 cardinal successful nan anterior twelvemonth period, while adjusted pretax income was complete $4 million, versus adjusted pretax income attributable to Primerica of $0.4 cardinal past year.

Glenn covered astir of nan cardinal aspects of our Senior Health results successful his remarks, but fto maine quickly touch connected 2 topics. The 4th fourth included a $3.8 cardinal gross adjustment, mostly to bespeak nan last first twelvemonth committee collections connected policies that became effective successful 2022 that were higher than assumed passim nan year. The accommodation accrued first twelvemonth committee revenues to lucifer nan existent rate received during nan twelvemonth since these policies are nary longer taxable to complaint back.

As anticipated, nan Senior Health business required nary nett superior contributions from Primerica to money operations during 2022 aft considering nan taxation use from nett operating taxation losses utilized by nan consolidated group. We do not expect nan Senior Health business to get immoderate important superior from nan genitor successful 2023 either.

We scheme to supply a much elaborate financial outlook for nan Senior Health conception erstwhile we study first 4th results successful May.

Consolidated security and different operating expenses accrued astir 7% year-over-year, successful statement pinch expectations. Looking up to 2023, we expect security and different operating expenses to summation by astir $22 cardinal to $28 million, aliases 4% to 5%. Around $14 cardinal of nan summation comes from staffing-related costs, driven by higher salaries and worker benefits, and efforts to trim unfastened positions. Supporting maturation successful our business will adhd astir different $12 million, while ongoing exertion initiatives, including infrastructure, modernization, CRM and cybersecurity, will adhd astir $9 cardinal to year-over-year costs.

In comparison to 2022, 2023's expenses will use from returning to our emblematic cadence of section activity events and a little Canadian speech rate. By segment, astir 35% of nan year-over-year summation is expected successful ISP and astir 45% successful Corporate and Other, pinch disbursal increases successful Term Life and Senior Health being comparatively minor.

Finally, our invested plus portfolio remains good diversified pinch an mean standing of A and a long of 4.7 years. Rising liking rates and maturation successful nan portfolio proceed to supply tailwinds for nan nett finance income, and we proceed to look astatine opportunities to return advantage of higher rates. During nan quarter, we reinvested caller money successful our longer-term security portfolio astatine a complaint of 5.95%. Assuming a unchangeable complaint situation successful 2023, you would expect nett finance income to beryllium astir 25% higher than successful 2022.

Liquidity astatine nan holding institution remains strong, pinch invested assets and rate of $309 cardinal and Primerica Life statutory risk-based superior ratio is estimated to beryllium 475% arsenic of year-end. We repurchased $32 cardinal of our communal banal during nan quarter, completing our anterior authorization.

As announced successful November, we person received a caller authorization for a $375 cardinal stock repurchase programme that runs done nan extremity of this year.

With that, operator, I will unfastened nan statement up for questions.

Question-and-Answer Session

Operator

[Operator Instructions]. And our first mobility comes from nan statement of Andrew Kligerman pinch Credit Suisse.

Andrew Kligerman

On nan Term Life segment, I'm trying to get a small amended knowing of what this caller merchandise constitutes arsenic it sounds for illustration nan erstwhile merchandise astatine a rider and past only 15% of nan group utilized it and now you don't person nan rider. Just want to make judge I understand nan difference. Is nan caller merchandise cheaper, and why aliases why not do you deliberation it will boost income going forward?

Glenn Williams

Yes. If I tin return that successful 2 parts, Andrew. The alteration of nan rider is simply a comparatively insignificant issue. As I explained, historically, we had put 2 adults connected a argumentation utilizing a spouse rider aliases wherever appropriate. And complete time, owed to clients' desire to power their policies arsenic individual lives and different reasons, marriages that don't make it complete time, those kinds of things, group are utilizing that little and less, and conscionable I deliberation immoderate of nan alteration successful nan measurement households are created coming versus decades ago. And truthful we felt for illustration nan elasticity of going to abstracted policies for abstracted lives gave maximum elasticity to nan client. It besides enabled us, arsenic we were adding underwriting classes to beryllium much circumstantial and targeted successful our pricing. So it had benefits for nan client, it benefits for nan income unit and benefits for nan company. But nary of those were revolutionary and would create a existent alteration successful merchandise income different than nan measurement we count nan policies is much favorable by doing it arsenic individual life. So that's what I was trying to describe.

Overall, arsenic we've usually done historically, we place arsenic we spell things astir our merchandise set, we'd for illustration to alteration astatine nan adjacent opportunity improvements we'd for illustration to make. And we had a full bid of those that person built up complete respective years that we decided to each onslaught astatine 1 time. One was an effort to simplify everything astir nan life security process and product, some nan process for nan customer and supplier successful nan section to usage advancing exertion and capabilities to make nan exertion and rumor process simpler and faster, much technologically advanced. We did each of that. Then connected nan merchandise conception itself -- well, earlier I time off that simplification, we moreover simplified nan argumentation that's issued itself. We've gone to overmuch much physics rumor wherever we still person a batch of clients that are requesting a difficult transcript of a policy. That's done successful a simplified connection format. It's overmuch easier for mediate income families to understand what they bought. So it was benignant of a departure from nan method position of security and nan very legalistic measurement policies were written to a measurement that was overmuch much consumer-friendly successful our opinion.

And past successful summation to that, we felt for illustration we needed to target our pricing differently, and that was nan chat we've had successful nan past erstwhile we moved from 3 aliases 4 underwriting categories to 10, wherever we simply person much opportunities to lucifer a client's consequence pinch our pricing much accurately. And that does consequence successful immoderate value decreases successful immoderate areas. In different areas, location are immoderate value increases. For example, connected smoker rates, we felt for illustration we were astir apt a small excessively debased connected our smoker complaint truthful we summation them. So it was an accommodation of each of that, a very wide group of changes that administered to nan needs of each of our constituencies, and overall, it's created a batch of excitement successful our income force, and they judge that we're overmuch much competitory successful nan marketplace, not conscionable successful our pricing accuracy, but besides successful our process and conscionable nan customer acquisition than we've been successful nan past. So we're getting very affirmative guidance to nan changes.

Andrew Kligerman

That's very helpful, Glenn. And past if I tin deliberation astir a small bit, nan the income maturation outlook. And I deliberation what I heard successful nan prepared remarks was that you're apt to spot astir a 1% summation successful word income successful nan first quarter. And past location would beryllium a pickup successful nan 2nd half. I want to make judge that -- because you were talking astir utilizing a different metric, truthful I want to make judge that I understood that right. And past besides successful nan commentary, you talked astir costs of surviving pressures connected sales. So nan first portion of it is, do I understand that right, 1% successful nan first 4th and past successful nan backmost half, you mightiness spot a pickup? And would that beryllium contempt costs of surviving pressures?

Glenn Williams

Yes. That's precisely right. That takes into relationship some nan adjusted narration of nan measurement policies were accounted successful nan past versus today. That gives america a tailwind. The caller accounting method gives america a tailwind and argumentation count, and we wanted to beryllium very clear that we're not including that successful our optimism of maturation for nan future. So nan 1% first quarter, mid-single digits for nan twelvemonth includes some readjusting historically for nan argumentation count alteration and besides taking into relationship nan headwinds from inflation, each that and included successful those 2 numbers of 1% successful nan first 4th and mid-single digits for nan afloat year.

Andrew Kligerman

Got it. Very helpful. And past if I could conscionable quickly sneak successful 1 connected your Senior Health business. So you trim nan income unit successful half. Could you springiness america a consciousness of really large nan income unit is? And do you consciousness for illustration each of nan adjusting that was needed is done, and that you tin -- and it sounds for illustration you're moving guardant very positively and your competitors person seen a batch of improvement, too. So do you consciousness for illustration you're successful a unchangeable place, and really large is nan income force?

Glenn Williams

Yes, Andrew. As we described, it was a very deliberate action that we took -- took spot successful reducing our income unit by not hiring up, letting attrition return attraction of immoderate of that and besides eliminating immoderate positions for immoderate of our little effective, effective defined arsenic productive but besides profitable representatives. So it was precisely nan type of pruning system that you mightiness describe. I judge our income unit count correct now is successful nan mid-300 range, astir 300 aft those changes. And of course, that's our employed income force, e-TeleQuote not to beryllium confused pinch our superior independent contractor representatives. But it's astir 300 correct now aft that activity is taking place.

Operator

The adjacent mobility is from nan statement of Dan Bergman pinch Jefferies.

Daniel Bergman

My first mobility was conscionable connected superior return and free rate travel generation. I deliberation mixed pinch nan caller dividend increase, nan $375 cardinal buyback authorization applies astir $475 cardinal aliases truthful of superior return successful 2023. So I wanted to get a sense, is that level sustainable station this year? Or is simply a information of it funded by drawdown of nan RBC and holdco rate from nan existent elevated level? Just immoderate thoughts connected that and/or nan expected level of tally complaint superior generation, peculiarly if aliases erstwhile Term Life income and Senior Health income revert backmost to maturation would beryllium helpful?

Alison Rand

Sure. I'll return that one, Dan. And yes, we judge it is sustainable. The beauty of our Term Life business, I talked astir nan predictability. We now person moreover much predictability connected a GAAP basis, but we've ever had beautiful beardown predictability connected a rate travel ground because nan business is truthful mature, truthful homogenous, truthful good reinsured that it's protected against a batch of anomalies. So we do judge that is very sustainable.

The existent RBC I mentioned, you specifically asked, but we really are a small overstated connected our RBC ratio versus what we would opportunity our target is. But that has to do pinch nan circumstantial rules that are retired location pinch respect to nan maximum you tin return retired successful immoderate fixed year. We were capped retired this twelvemonth based connected 2021 statutory earnings, which were really a small spot little than normal for 2 reasons. One was because of COVID, nan precocious claims, and rather frankly, nan precocious sales, which costs america a batch of statutory net because you don't get to woody pinch nan deferrability of DAC. And past also, we had immoderate nuances pinch immoderate of our financing transactions, our reinsurance financing transactions wherever they were successful their life cycle. But we do spot that nan rate travel procreation retired of Primerica Life was very robust successful 2022, will proceed to beryllium very robust successful 2023, and we do not foresee immoderate awesome headwinds coming retired of that operating rate flow.

Daniel Bergman

Got it. That's really helpful. And past possibly conscionable shifting gears. If I sewage nan numbers correct from nan prepared remarks, it sounds for illustration you're guiding to astir 3% maturation successful nan life licence income unit successful 2023. So if that's right, conscionable immoderate colour you tin springiness connected benignant of nan main drivers aliases assumptions successful nan outlook? And it sounds for illustration possibly it's moderating a small spot year-over-year, but Also, conscionable funny what -- does that presume arsenic acold arsenic nan macroeconomic backdrop, and if location is simply a imaginable recession later this twelvemonth aliases successful 2024, would that person immoderate effect 1 measurement aliases nan different connected your outlook for nan income unit growth?

Glenn Williams

Sure, Dan. I do deliberation we benefited successful 2022 from a small catch-up from respective years of being level aliases flattish aliases astatine slightest distracted by each of nan challenges astatine nan authorities and provincial licensing levels of COVID. So that astir apt gave america a tailwind past year, and we're projecting much of a normalized twelvemonth for 2023, which gives america benignant of that 3% number. And erstwhile again, that's each in. We've had stronger momentum than that successful 2022. And truthful that's taking into information that whitethorn person been -- we whitethorn person had that tailwind that whitethorn not exist, truthful a small conservatism from that point, taking into information nan economical disruptions arsenic we've talked astir galore times. People that are -- person mislaid jobs are astir apt not nan premier target for a Primerica opportunity because they request to beryllium reemployed quickly and person an income for their families, but those that are concerned astir losing their jobs are astir apt nan cleanable imaginable enlistee for Primerica. Unfortunately, I deliberation there's going to beryllium a batch of some astir apt this year, but we do deliberation that nan recruiting apical statement numbers are going to stay beardown during nan year. And past it's conscionable going to beryllium that day-to-day conflict astatine each authorities and state level of pulling recruits done nan licenses, which we've made advancement on, but we're very realistic that, that's a -- each day, you person to activity pinch each authorities and each state connected their process and our reps and recruits to propulsion group through. So we don't want to beryllium overly optimistic astir that either.

So it benignant of takes each of that realism into relationship successful coming up pinch that number. We are anticipating -- we surely don't person a crystal ball, but we are anticipating continued costs of surviving pressures this year, continued disruption successful nan employment market, which, arsenic I said, has some positives and negatives for our business. But we're trying to return -- put each that successful nan look erstwhile we springiness those numbers, and that's what's down our thinking.

Operator

Our adjacent mobility is from nan statement of Ryan Krueger pinch KBW.

Ryan Krueger

Thanks for each nan item connected LDTI. Maybe conscionable to put it each together, I want to spot if you work together pinch this. It seems for illustration possibly LDTI is resulting successful astir an $80 cardinal pretax net uplift. Is that successful nan correct ballpark?

Alison Rand

So we haven't reported 2022 yet. So I don't want to opportunity my controller and my auditors would beryllium very reluctant for maine to springiness a number. We will springiness that number, for illustration I said, anterior to 4th fourth -- I mean, nan first 4th [indiscernible] coming out. Let maine conscionable -- I mean, I cognize what you're getting at. I do want to conscionable caution. From present connected forward, each of our comparisons will only beryllium connected an LDTI basis. So this $80 cardinal you're talking about, aliases immoderate nan number turns retired to be, benignant of miraculously comes from wherever we are coming to wherever you're going to -- our caller starting constituent will be. But I would conscionable be aware everybody. Well, I deliberation it's affirmative that LDTI isn't going to wounded our financial results, I'd really attraction connected nan truth that what it does for america moving guardant is it makes our results moreover much predictable and unchangeable than they've been successful nan past because nan swings associated pinch persistency astir DAC really get minimized. And immoderate benignant of period-related variability successful claims mostly gets dispersed to aggregate periods. So that would beryllium my attraction for you.

Earnings will beryllium higher nether LDTI, but nan restated '22 net will besides beryllium higher nether LDTI.

Ryan Krueger

Okay. Understood. Separately, connected persistency. I conjecture utilizing nan Term Life guidelines amount, rotation forward, it looked for illustration possibly persistency deteriorated some, but I cognize that's not a cleanable measure. So I was conscionable hoping you could supply immoderate further item connected what you saw successful persistency astatine this point?

Alison Rand

Sure. And I don't cognize if you're comparing to past twelvemonth aliases nan erstwhile quarter. What I would opportunity to -- immoderate erstwhile 4th is nan 4th fourth has typically been a week aliases a precocious past play aliases a week persistency play for us. So we person typically seen higher DAC ratios successful nan 4th fourth vis-a-vis different quarters. And past if you're talking astir specifically year-over-year, past year, arsenic I described successful my prepared remarks, we still were getting a adjacent magnitude of tailwind from nan use from nan pandemic, which are mostly muted astatine this point.

Ryan Krueger

If I could sneak 1 past 1 in. Have you -- now that, I guess, we've emerged from nan pandemic and are successful much of an endemic phase, person you seen immoderate changes from reinsurers successful position of pricing aliases if things stay beautiful stable?

Alison Rand

Yes. Things person really remained stable. I cognize that's been a large area of question. We -- arsenic Glenn described, we did -- we launched a product. We launched it conscionable this past October. As portion of that, we had to spell to each of our reinsurers and get updated pricing. They person -- obviously, they needed to spot what nan merchandise is and nan underwriting creation is going to beryllium to springiness america pricing. And we landed, and I'd say, a very bully authorities pinch each of our reinsurers. We were capable to support each of our cardinal players successful our pool. We did spot -- what we did spot was it, put speech COVID, location had been immoderate deterioration successful mortality improvements conscionable successful nan normal people complete nan past respective years. So location was immoderate of that. But successful immoderate places, we really saw improvements successful rates, for illustration connected our humor tested business wherever we're getting much and much accusation done our testing process. So net-net, we didn't spot COVID per se arsenic having immoderate effect connected those rates. And we deliberation that nan rates we sewage appropriately bespeak what we judge nan underlying consequence vulnerability is connected our portfolio and connected our caller business.

Operator

[Operator Instructions]. The adjacent mobility is from nan statement of Max [indiscernible] pinch Truth Securities.

Unidentified Analyst

I'm calling connected behalf of Mark Hughes. I cognize you mentioned you don't person a crystal ball, but erstwhile you're looking astatine nan liking complaint for nan remainder of nan year, are dollar assuming that nan liking complaint is going to enactment elevated passim nan full year? And if so, is that going to person different favorable effect erstwhile you look astatine nan caller year's business that you've locked in?

Alison Rand

Okay. So I thought you were asking astir nett finance income. So conscionable to beryllium clear, that full locking-in move that I described nether nan use ratio for FAD60 beautiful overmuch goes distant nether LDTI because we'll beryllium utilizing existent rates. I guess, theoretically, we will fastener them in, but each of our assumptions that we've made for our caller business successful 2023 assumes a complaint situation that's accordant pinch wherever it is now. So each of our forecast, each nan accusation I provided, I would say, already has a unchangeable complaint situation embedded successful it. What it doesn't person is simply a massively changing, either up aliases down, complaint environment.

So I'd opportunity erstwhile you talk astir NII specifically, again, we are assuming a beautiful unchangeable complaint environment. Realistically, short-term rates person been highly favorable. Don't cognize if that's going to past per se. But correct now, we've been capable to return advantage of attracting really bully output without having to spell up agelong connected nan curve. As those shifts -- arsenic nan output curve shift, we whitethorn person to spell a small further out, but again, thing beyond our normal range. So I deliberation we -- I deliberation each nan projections I've fixed you person taken into relationship our expectations, which is mostly an wide unchangeable output environment.

Unidentified Analyst

Okay. That's very helpful. And for nan mean premium per policy, we saw that was down a small spot successful nan 4th quarter. Is that owed to nan caller merchandise updates aliases customers buying little sum possibly owed to immoderate financial pressures?

Alison Rand

I wouldn't property it to overmuch of anything. We've had -- I mean, we had little Canadian speech rates that would -- truthful would effect our Canadian business. There's been a small spot of transitioning going on. We do -- truthful erstwhile each is said and done, I wouldn't publication overmuch into it specifically for nan 4th quarter. That is simply a statistic, specifically nan annualized issued premium alternatively than nan premium per argumentation is going to beryllium thing that we'll beryllium focusing connected adjacent year, particularly fixed nan alteration we person successful our -- nan measurement policies are getting counted. But there's thing circumstantial astir what happened successful nan 4th fourth that we would opportunity is an emerging trend.

Operator

We've reached nan extremity of our question-and-answer session. That will besides reason today's conference. You whitethorn now disconnect your lines astatine this time, and we convey you for your participation, and person a awesome day.