DULUTH, Ga. - Primerica, Inc. (NYSE:PRI) has decided to withdraw from the senior health market by divesting its subsidiary e-TeleQuote Insurance, Inc., a move driven by profitability challenges and a tough regulatory landscape. The Board of Directors concluded that the expected shareholder value from the acquisition, completed in July 2021, has not materialized, prompting the exit.
The insurance and financial services provider, which caters to middle-income families in North America, is working with a third-party consultant to facilitate the divestiture process. Primerica anticipates relinquishing its ownership of e-TeleQuote by no later than September 30, 2024. At that time, it is expected that e-TeleQuote will be taken over by a yet-to-be-identified third party.
Glenn Williams, CEO of Primerica, emphasized that despite the divestiture, the company would continue to support its client relationships and maintain current staffing levels at e-TeleQuote throughout the transition period. He also assured that seniors who have obtained Medicare Advantage or Medicare Supplement policies through e-TeleQuote would not be affected as they are clients of the insurance carriers.
Primerica's representatives will keep referring clients to e-TeleQuote until the ownership transfer is complete. Afterward, the new owners will assume the responsibility of communicating with e-TeleQuote clients.
The decision to exit the senior health business reflects the significant structural changes within the sector since the acquisition of e-TeleQuote, as well as an uncertain regulatory environment that could potentially impact the business negatively.
This strategic shift is part of Primerica's ongoing efforts to maximize shareholder value and focus on its core business strengths. The company, which is a major provider of term life insurance and other financial products, insured over 5.7 million lives and managed over 2.9 million client investment accounts as of December 31, 2023.
In other recent news, Primerica reported a robust first quarter, marked by growth in its core businesses of Term Life and Investment and Savings products. The company's adjusted net operating income rose by 4% to $137 million, with adjusted operating income per share up by 10% to $3.91. However, Primerica's Senior Health segment reported a $14 million loss for the quarter. The company's sales force expanded by 18% year-over-year, with over 110,000 new recruits in Q1. Term life policy sales increased by 2% to 86,587, while investment product sales surged by 20% to $2.8 billion. Despite challenges in the Senior Health segment, Primerica anticipates a 3% to 5% increase in the number of policies issued and high single-digit sales growth for the full year. A $50 million payment related to the e-TeleQuote acquisition will be recognized as a gain in Q2. These are recent developments that highlight the company's performance and growth trajectory.
InvestingPro Insights
As Primerica, Inc. (NYSE:PRI) navigates the divestiture of its subsidiary e-TeleQuote, the company's financial metrics provide a broader context for investors. According to recent data, Primerica boasts a market capitalization of $8.63 billion USD, reflecting its substantial presence in the insurance and financial services sector. The company's P/E ratio stands at a competitive 15.2, with an adjusted P/E ratio for the last twelve months as of Q1 2024 at 14.81, indicating that the company is trading at a low price relative to near-term earnings growth—a positive sign for investors looking for value.
Furthermore, Primerica has demonstrated a commitment to rewarding its shareholders, having raised its dividend for 14 consecutive years. This consistent increase, coupled with a healthy dividend yield of 1.22%, indicates a stable return for income-focused investors. Additionally, the company's strong performance is underlined by a 15.13% total return over the last three months, suggesting robust short-term growth which may be of interest to those seeking momentum in their investments.
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