Good morning. And welcome to the Primerica Fourth Quarter 2013 Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today’s presentation there will be an opportunity to ask questions. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Kathryn Kieser. Please go ahead.

Thank you, Amy. Good morning, everyone. Thank you for joining us as we discuss Primerica's results for the fourth quarter of 2013. Yesterday afternoon, we issued our press release reporting financial results for the quarter ended December 31, 2013. A copy of the press release is available in the Investor Relations section of our website at investors.primerica.com. With us on the call this morning are Rick Williams, our Chairman and Co-CEO; John Addison, our Chairman of Primerica Distribution and Co-CEO; and Alison Rand, our CFO. We referenced certain non-GAAP financial measures in our press release and on this call. These non-GAAP measures are provided because management uses them in making financial, operating and planning decisions, and in evaluating the company's performance. We believe these measures will assist you in assessing the company's underlying performance for the periods being reported. These non-GAAP measures have limitations and reconciliations between non-GAAP and GAAP financial measures are attached to our press release. You can see our GAAP results on page three of the presentation. On today's call, we will make forward-looking statements in accordance with the Safe Harbor provision of the Securities Litigation Reform Act of 1995. Forward-looking statements include any statement that may project, indicate or imply future results, events, performance or achievements, and may contain words such as expect, intend, plan, anticipate, estimate, and believe or similar words derived from those words. They are not guarantees and such statements involve risks and uncertainties that could cause actual results to differ material from these statements. For a discussion of these risks, please see risk factors contained in our Form 10-K for the year ended December 31, 2012. This morning's call is being recorded and webcast live on the Internet. The webcast and corresponding slides will be available in the Investor Relations section of our website for at least 30 days after the presentation. After the prepared remarks, we will open the call for questions from our dial-in participants. Now I'll turn the call over to Rick.

Thank you, Kathryn, and good morning, everyone. Welcome to Primerica's fourth quarter 2013 earnings call. In 2013 we delivered shareholder value by focusing on initiatives to drive long-term sales and earnings growth, while actively deploying capital. Beginning on slide four, you can see operating revenues for the full year 2013 increased 7% to $1.26 billion, driven by term life net premium growth of 10% and strong investment savings products performance compared to 2012. Positive market conditions, as well as enhancements to our ISP product offerings let to an 11% increase in ISP sales and a 20% increase in client asset values at the end of 2013 versus a year ago period. Net operating income was $171 million, down $3.5 million in 2013 compared to 2012, partially reflecting a $12.1 million year-over-year decline in net investment income related to lower yield on invested assets, as well as lower invested asset base following the repurchase common stock and warrants. The lower net operating income also reflects a $28.1 million increase in insurance and operating expenses due to higher growth related and employee related expenses. Expenses associated with the move to our new headquarters and $11.4 million of legal fees and expenses related to the Florida Retirement System matter, which impacted operating earnings per share by $0.13 in 2013. Although, FRS expenses put downward pressure on 2013 results, active capital deployment drove a 9% increase in net operating earnings per diluted share to $2.97 compared with $2.72 in 2012, and ROE increased 70 basis points to 15% in 2013, 14.3% in 2012. Due to the high cost -- the high defense costs and the risk associated with continued litigation, we entered into a Memorandum of Understanding to settle the FRS matter in January. The successful litigation of these matters was a substantial factor…

Thanks Rick. Good morning everybody. We’re trying to make it through another snow jam here in Atlanta. The incentive enhancements made our business opportunity, product portfolio and client experience in 2013 drove over 3% increase in the size of our life insurance license sales force and an 11% increase in ISP sales in 2013 versus 2012. Our average annualized issued premium in face amount of life insurance policies, both increased year-over-year. And we experienced a healthy 6% growth in the number of our Regional Vice Presidents which represent new distribution outlets across America. Our mid-year buying yield convention created some downward pressure on distribution results in the first half of the year. Typically recruiting and life insurance sales trend lower in the first half of the convention year because we do not run incentive trip and after the convention there is a lift in production. As we said in the past in the first half of 2013, our sales force were still adjusting to the significant change made to life insurance compensation in late 2012. This resulted in a 10% decline in recruiting and 7% decline in policies issue compared with the first half of 2013. In our June convention, we announced new product offerings, technology enhancements and incentives that drove over significant improvement in distribution results. Recruiting of new representatives increased 6%, new life insurance licenses grew 7% and life insurance policies issued increased 1% in the second half of 2013 compared with the second half of 2012. Our investment and savings product business hit an all-time record in both sales and client asset base in 2013 due to expanded product offerings and platform enhancements as well as positive market performance. We also made progress in growing the size of our life insurance license sales force through increased licensing…

Thank you, John. Good morning everyone. Earlier in the call, Rick highlighted key aspects of our full year 2013 results. Let me now take you through the results for the fourth quarter as well as a new Equity Rollforward added to our financial supplement this quarter. In the fourth quarter, operating revenues increased by 8% and net operating income increased 12% versus a year ago period primarily reflecting growth in New Term Premiums and strong Investment and Savings Product performance, including a 19% growth in average client asset value. Results in the quarter also reflects lower net investment income due to lower yields on invested assets and a smaller invested base following share repurchases. Insurance and other operating expenses were held to the lower end of the guidance we provided last quarter. On Slide 7, Term Life operating revenues increased 10% driven by 11% increase in net premium. Net investment income allocated to Term Life with required assets partially offset by lower yield on invested assets. Term Life operating income before income taxes is 14% year-over-year reflecting modest expense growth and general improvement in consistency. Benefits and claims grew in line with net premium at incurred claim levels were consistent with historical period. Turning to the Term Life sub segment, new Term pre-tax operating income as a percentage of direct premiums expanded year-over-year from 11% to 15%, reflecting improved persistency and modest expense growth in relation to the building of the enforced block. In legacy, pre-tax operating income was 7.2% of direct premium during the current quarter, which was in line with the previous quarter and the prior year period. Fourth quarter benefited from about a $1 million reversal of previously amortized commissions that positively impacted legacy DAC amortization. Additionally, a premium tax refund benefited legacy insurance expenses in the…

Fourth quarter results were marked by solid quarter performance across business segments. Our recurring income base and positive investments in savings product performance coupled with the prior share repurchases continue to drive expansion of operating earnings per share and ROE, underscoring the strength of our franchise. As we look to the future we will continue to execute initiatives to grow distribution capabilities, increase earnings and redeploy capital in order to drive long-term shareholder value. Now we will open it up to questions.

(Operator Instructions) And our first question comes from Mark Finkelstein at Evercore.

Good morning.

Good morning.

Good morning, Mark.

A few questions. I guess the first question is just on the ROE update, is that purely due to the FSR possible settlement or are there any other factors that drove the higher ROEs and outlook going forward?

Okay. You mean the prospective ROEs going forward. While obviously without the FRS expenses, the 15% that we did in 2013 would be higher. And as I indicated beyond 2014, we do see some possibility for expansion above that, as the business grows with the layering on, on the life insurance business and as our ISP business grows.

Okay. I guess a question on ISP, you’ve added products, you had good sales in that area, but the flow story hasn’t really kind of turned the corner in a material way in terms of really adding to the flows. When do we hit that point where whether it’s Canadian seg funds or have you kind of start to moderate, do you start to see the growth given the higher sales volumes?

You mean the growth in net sales, sales less redemptions?

Yes, net flows.

Yeah, I mean, it did improve year-over-year from $270 million to $384 million and I think that will continue to improve as sales improve. I mean, our redemption rates are relatively flat, as a percentage of AUMs. And as our sales grow that will continue to improve as long as sales do from the level in 2013.

Okay. And then just one final question on the new term, the DAC number, was that -- was the higher sequential DAC purely due to the seasonality factor and the lower persistency, or was there anything else going on in the DAC amortization in the fourth quarter, I am talking about new DAC or terms?

Or net terms?

Yes.

Specifically with new term, it’s a combination, it’s really three things that on a sequential basis it is the seasonality, I mean it was slightly more favorable than we would have expected because of better persistency. We saw a lot of efforts as we’ve seen in the third quarter also. So keep that much the difference on a sequential basis. Year-over-year we saw a more dramatic improvement because of persistency but you also had general growth because of growing in the size of the business, you are growing up the premium base.

Okay, all right. Thank you.

Our next question comes from Steven Schwartz at Raymond James.

Hey, good morning, everybody. John, I have no tree for you for the snow.

I will tell you what, thanks, but in Chicago at least you have sand and salt trucks.

That’s true. But I do ask about weather and given kind of your -- you do have some territoriality I guess if the horrible weather might be affecting 1Q sales results?

I think there is a possibility, I mean Januarys were crooning, was a little less than what we had hoped it would be, but we actually feel good about the things we’re doing, and then hopefully coming out of Hawaii with some serious memorable things, but that’s it. This is pure anecdotal here. Having talked in the last week with the bunch of our senior leaders in the Midwest and the Northeast in all honesty including down in here, I mean our business is driving to homes and driving to meetings. So I think it will have an effect. There is no like panacea effect with our field or whatever, but I do think Steven it will have an effect, because Primerica is a business that is as one of our guys describes it, it is in the car driving in (inaudible). So we think it will have an effect, but I don’t think it will have a dramatic effect.

Okay. And just to be ready for the possibility. Rick on FRS, if this doesn’t happen, I mean do you just - it goes back to the way it was or you just fight this out case by case?

Yeah, if it doesn’t happen that is what happens, so it goes back to a case by case basis with the expenses being elevated like they were in 2012 -- 2013 rather. I am hopeful that will be resolved though, so we will see in a few months.

And Alison a couple of questions for you, to lower the premium tax adjustment that you cited a couple of times, how much was that in the quarter?

The reason itself was just under a $1 million and then we had a couple $100,000 worth of rate adjustments associated with that so we basically trued up our core rates as well based on the things that we found we were able to get refunds for, about $1.3 million in the aggregate.

$1.3 million pretax, okay. And then there was a -- I didn’t catch that, I apologize, there was a reference to the 6% reference with regards to I think it was legacy premium, what was that?

That was the legacy, sometimes we call it margin, but technically it’s in our financial supplement as some operating income as a percentage of direct premiums, that ratio was 7.2 for this quarter, it’s a little elevated because of those -- some of that premium tax adjustment as well as what I mentioned with the commission amortization reversal.

Right, yes.

In legacy. And I was highlighting that as we said in the past we expect that rate to get down into mid-6s this year.

Okay, great. All right. Thank you, guys.

Thanks, Steven.

Our next question comes from Jeff Schuman at KBW.

Thanks. Good morning.

Good morning.

I just wanted to know, I like Steven, I feel terrible about your weather, bring me a lot into Hawaii, we could talk about that.

Jeff, absolutely shower with the flash light this morning, power is out in Clermont, Georgia so we don’t handle, (inaudible) don’t do weather well.

I am glad you meet into the call. So a couple of questions. John, you had given us some perspective on kind of the sales for count maybe sort of end of the first quarter and then kind of the normalized growth potential. I was wondering if you could talk about couple other factors that also end up impacting sales, one would be productivity which for the quarter in the year was very much within historical ranges, but a little bit, I think down from last year, so may be little prospective on where that might go? And then a new trend in the last couple of quarters have been notable increases in the average premium per policy, I am wondering what’s driving that, is it face amount, is it age, what’s going on there?

Okay. First on the productivity, one of the things that we said in the script and as you noticed in our numbers is that non-renewals have been better, as well as our licensing rate better. Now there is good news and bad news, mainly good news, but I mean, if there is kind of yen and yen to non-renewal is being higher, because the people that renewed, the marginal renewals, I think speak to that, people feel better, the economy is better, if you remember a couple of three years ago we were talking about renewals being lower because people have to pay to renew their license and if they have a made a sale in a while, if the economy is bad they don’t renew. Well, that’s gotten better and we are having more people renew their license. But the people that make that decision at the age are the more marginal producers. So that has -- that is one of the reasons that productivity is down a little bit or whatever is that, fortunately size of the sales force is up bit of piece of that is because less marginal non-renewals leaving and more staying. But again within our historical range, the gold is to grow recruiting and grow the new licenses which when people come in the front door is when they were at their most productive component of it. Again -- and then also on average size, the average size had gotten to a, it was much higher prior to the collapse in ’08 and stuff like that and it seems to be moving back in a very positive direction. I think a piece of that is we have improved technology a point of distribution on our insurance sales. We have implemented a new web-based financial needs analysis which leads people to sale more to the needs of the person at the kitchen table and we are very positive about the fact that that is moving on the right direction and our goal is to keep it moving back up. So, I guess, net-net, I would say there are underlying healthy trends to everything we see and as I am preparing to go to Hawaii, John’s message is for, our goal is to get a recruiting improvement, to get recruiting to really move up but to maintain all of the healthy things that we have done on the underlying mechanisms of the business to grow the new licenses but those -- that’s kind of the answer on those two things.

Okay. That’s very helpful. And one for Alison, just to make sure I got this right. So in the investment portfolio, 2014 maturity is sort of coming out at 4.5%, which is still north of the new money rate, but much closer than the stuff that has been coming out recently as much higher, is that correct?

That is correct. Obviously, when you are looking at a calendar year’s earning, you have to consider what’s come out in the recent past but on a futuristic looking basis or going forward basis that would definitely the case.

All right. Thank you.

Our next question comes from Dan Bergman at UBS.

Hi. Good morning.

Good morning, Dan.

Hi, Dan.

Hey. Just a follow up on Mark’s earlier question, I wonder if you could provide any thoughts on the outlook for investment savings product sales, specifically areas, look like the growth in mutual fund has been a key driver the recent sales stream, given the market volatility we have seen so far in 2014? I wonder to see do you expect any pressure on, retail mutual funds sales going forward and just in general any thoughts on the sales outlook will be much appreciated? Thanks.

Rick, why don’t you go first and then I’ll.

Yeah. I mean, obviously, the volatility in the negative aspect in the market in the first part of January does have some impact on sales and so January sales were not as strong as we have liked, as John mentioned, really the same way with recruiting. But, overall, I do think that our marketplace has a strong need for the product and we -- as John talked about, we have been improving our tools for reaching the marketplace. So we are expecting growth in year-over-year investment sales maybe not as high as 2013 but still a good year.

And just to add in, January, it depends on what the market does over the next few months or whatever. Our business on a negative basis reacts to a real market kind of sustained correction, a sort of one time down one month. It is not -- it does not pull through in the trends of our production or whatever long term. So it -- it really -- the market it really depends on how the market does over the next few months as to how it will affect sales of our funds.

Okay. Great. That was very helpful. And then, just switching gears, so there are 2.3 million of the Florida Retirement System legal fees in the quarter and assuming a potential settlements to finalize, I assume this would decline going forward but any color on the outlook for legal expenses, following the 1 million that you are expecting the first quarter, it would be very helpful. I guess, this January, would this go to zero at some point in the near medium term or remain near that 1 million quarterly level for while. Just any thoughts on that would be very helpful?

Yeah. It’s hard to give that -- answer to that question because it really does depend upon what the number of opt-outs are. If you had no opt-outs, obviously the number goes to zero. More than likely they will be some but we’re not sure. So we really can’t answer that until we understand how many people do sign up for the settlement itself.

Okay, I understood.

All right.

Thank you.

Our next question comes from Sean Dargan at Macquarie.

Thank you and good morning. I have a question about share repurchase. I think Rick was describing share purchase in 2014 starting earlier in aggregate being larger and then I think some people were thinking about, is that a reflection of Massachusetts regulators, excuse me, getting more comfortable with your capital or just your outlook on FRS or what’s kind of driving that change?

The $150 million that we have been talking about is a consistent number. We’ve mentioned it, I think for the last two quarters but very specifically the timing of the transaction and where -- and/or the repurchases and where the funds would actually be driven from has a lot to do with if and when we get regulatory approval from Massachusetts. So I don’t think anything really has changed in our outlook there. Really the vast majority of 110 of the 150, we do anticipate coming from the life company. Based on our performance on the statutory basis this year or 2013, we believe all of the money that we need will be able to be extracted on an ordinary dividend basis but we do need to wait for that transaction to be finalized and approved before we can take any action.

Okay. And just around your strategy for share repurchase, do you see in the future, may be giving more significant share awards to employees and using share repurchases as a way to diffuse dilution or I mean this is going to be a material driver of your ROE expansion.

No, relative to employees and sales force equity, we really intend to hold those programs roughly at the same level they are, so there will be not an expansion from that perspective. And we do see it driving earnings per share and ROE as we are repurchasing capital. Between dividends and share repurchases we will be giving back to the shareholders a large percentage of the earnings, annual earnings with the company. And as earnings grow, you get expansion in earnings per share and ROE.

Okay. Thank you.

Our next question comes from Mark Hughes with SunTrust.

Thank you. Good morning.

Hey, Mark.

It’s still pretty clear here in Buckhead, but we’ll see how the day goes.

It’s not so clear up here. Dade County is not doing well. So it’s coming your way buddy.

All right, we’ll look forward to it. The persistency in the legacy block, it seems like that’s been very good. Is there any reason why that would change over the next couple of years, is the age or the profile of that block? Does that lead to a little more loss in policies or is this a good persistency for the foreseeable future?

I believe this is a good persistency. Again as we mentioned in the past, we do have seasonality to some quarters, we tend to see higher (inaudible) but if you’re looking at on annualized basis, this is a very good ratio to be looking at. In general that is a pretty stable block of business. Obviously the longer-term life policy stays in-force the more likely it is to continue to stay in-force. So we see a more stable, more predictable level of persistency here than we would say in new term, where the business is a lot of it’s in its first and second duration where we obviously see our highest obsession. So I think it is a good rate. We do need to keep in mind on a quarter-to-quarter basis the seasonality that we normally experience.

And then on the expense allowance within the legacy block, I think you’ve given some guidance about the pre-tax margin, maybe going to the mid-6s there. The legacy block or the allowance this quarter was a little higher than usual. I don’t know if you touched on that, but is that part of why you would expect that to moderate a little bit, is that going to come back to more normal levels?

The allowance really wasn’t a key driver to what we experienced this quarter. That will fluctuate a bit. It is largely driven by two things, one is the city allowances, that’s the biggest piece there, but we do so have some allowances on the owner business that was count short with third party reinsurers way back in the 80s and early 90s. So there’s a little bit of volatility there. So I don’t think you saw -- we didn’t see anything notable in allowances this quarter. And again that we are drivers as the return this quarter in legacy were obviously the overall performance at the block as well from a mortality standpoint as well as the two items I called out, one, some of that premium tax adjustment went to legacy and then also the reversal of previously amortized commissions about $900,000 there.

Thank you.

Very good. Thank you everybody. Stay warm and have a nice day. See you.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.