Good day and welcome to the Primerica Third Quarter 2015 Financial Results Conference Call and Webcast. All participants will be in listen only mode. [Operator Instructions]. Please note this event is being record. I would now like to turn the conference call over to Ms. Kathryn Kieser, Executive Vice President, Investor Relations. Ms. Kieser, the floor is yours then.

Thank you very much. Good morning, everyone. Welcome to Primerica's third quarter earnings call. A copy of our earnings release, financial supplement, presentation and the webcast of today's call are available on our website at investors.primerica.com. Glenn Williams, our Chief Executive Officer and Alison Rand, our Chief Financial Officer, will deliver prepared remarks, then we'll open it up for questions. We reference certain non-GAAP financial measures in our press release and on this call. 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 3 of the presentation. We will also make forward-looking statements in accordance with the Safe Harbor provisions of the Securities Litigation Reform Act. The company will not revise or update these statements to reflect new information, subsequent events or changes in strategy. Risks and uncertainties that could cause actual results to differ materially from these expressed or implied are discussed in the company's 2014 annual report on Form 10-K, as updated quarterly by our reports on Form 10-Q. Now I'll turn the call over to Glenn.

Thanks, Kathryn. Good morning, everyone. Today I will discuss our third quarter financial performance as well as distribution results. Beginning on Page 3 of the presentation, you can see that during the third quarter of 2015 operating revenues increased by 5% and net operating income grew 18% versus the prior year period. The strong operating results were driven by growth in the term life segment, including 21% growth in life insurance policies issued and a 12% increase in adjusted direct premiums. Investment and savings products segment revenues remained consistent with strong performance in the third quarter of 2014 despite market volatility and the declining Canadian dollar value. Comparisons of year-over-year companywide net operating income were impacted by approximately $3 million of unusually high incurred claims in the prior year period as well as $5.1 million of employee equity award expense related to the addition of retirement provisions to the 2014 awards in the third quarter of last year. The declining Canadian dollar value reduced operating revenues by approximately $11.5 million and net operating income by approximately $2 million versus the prior year period. Strong performance and ongoing share repurchases drove record EPS of $0.98 and record ROAE of 17.7% on an operating basis in the third quarter. Year-to-date ROAE is 16.4% and we expect ROAE to increase to around 18% for the full year 2016, driven by solid performance as well as continued capital deployment next year. During the third quarter of 2015 we repurchased $71.4 million or 1.6 million shares of common stock for a total of $181 million or 3.9 million shares repurchased through September 30, 2015. Year-to-date we have returned over 100% of Primerica’s net operating income to our stockholders through common stock repurchases and shareholder dividends. For the full year 2015 we expect to repurchase a…

Thank you, Glenn and good morning everyone. Before I go through the quarter’s results, let me spend a few minutes discussing the change we made this quarter to our basis of our allocating net investment income and interest expense between segments. As you can see on Slide 7, this change had the effect of moving the majority of net investment income and all interest expense previously reflected in term life to our corporate and other distributed product segment. There was no impact on the company’s consolidated financial statements as a result of this change nor does it influence the way we view the profitability of our products. We believe the new allocation to DAC [ph] is a better reflection of how we evaluate our term life business and manage our invested asset portfolio. Historically we have used statutory reserve and required capital as the basis for allocating invested asset and income to term life. Over the last several years we have successfully executed statutory reserve financing transactions, have greatly reduced the level of invested assets we need to hold to support statutory reserves. As a result, we have chosen to allocate net investment income to term life such that it equally offsets the net interest accreted to the segment’s GAAP future policy benefit reserve less the DAC acquisition costs in lieu of using a statutory based approach. This method is consistent with our view that net investment income is not a key driver of earnings for the term life segment, nor does it heavily influence product pricing decisions. Going forward net investment income should be a small but modestly increasing component of the term life segment’s operating income. We believe this change provides a clearer view of long term income dynamics for term life while showing the full performance of…

[Operator Instructions] The first question we have comes from Suneet Kamath of UBS.

I wanted to start with the DOL if I could. I think on the last quarter call we’d talked about -- if the plan goes through as proposed, you’d operate outside the big and as such you’d have to have these levelized commissions. Have you spent any time talking to your manufacturing partners about how feasible it is to have levelized commissions across a variety of different products?

Good morning, Suneet. Good question. We have open conversations with of our product providers on a preliminary basis, without details of the final rule it’s a little difficult to frame it exactly. But we have talked with them about the topic, engaged in some very good conversations and shown that they’re interested in continuing those conversations but we’ve been unable to take them to a detailed level without more understanding of what the final rule might be. But we certainly have those lines of communications open.

As you think about sort of next steps here, I mean, I am not asking for details but are your conversations leading you to suggest that it’s feasible to have levelized commissions across a variety of different products?

Yes. Of course as we talk to each provider, we’re speaking with them about their products, and of course our product providers have numbers, large numbers of products under – each umbrella. So as we talk to those providers we’re discussing with them about levelizing or equalizing compensation if you will among all of their products, and then of course as we move from one provider to another we make them aware of the potential for us to talk across providers in the future. So yes, absolutely we are doing that and we’ve got a good indication that that’s a possibility if it should become necessary.

And I will say and we mentioned this last quarter, that given the amount of work that goes into this, it is likely that we would have to limit the number of providers we work with but that being said, we feel like we could still have a full breadth of opportunity for our clients.

Okay but I guess then doesn't limiting the number of product providers in some ways go against what the DOL is trying to do, which appears to me to be give as many options as possible?

No, first of all, Suneet, we operate in a simpler model with a simpler product set already and there are a set of products which we believe is appropriate to the middle-market. That said each of our mutual fund, providers, mutual fund providers more specifically have a large number of products within their product set. They cover all the asset classes. And so we can give appropriate coverage to the asset classes as needed through a narrower set of providers than perhaps a more traditional up market company might find it necessary to do to meet the demands of the consumer. But we don't believe there's a conflict in this view of what we’re trying to accomplish and the DOL’s view of breadth of product offering because we will have coverage of all asset classes.

And then I guess the last one on this is just -- we talked again I think about this on the last call. But just on the expense side there has been a lot of figures thrown out there about expense increases for the industry related to this. Have you done any more work on where expenses could go if this thing goes through?

Again we haven't looked at that and of course we have a very robust process in place today to operate under the current rules and feel like that covers most of the basis. Some of the things that are being discussed by the DOL that have been mentioned by the leadership of the DOL as potential for change as the rule evolves, or managing the types of processes they create these expenses. So number one, we feel like we have most of the basis covered with our infrastructure in place today. The things that may not be covered that we’re going to try to get clarity on are the topics of discussion that the DOL is working to address and simplify because the entire industry has raised that as an expense question and the possibility of building that infrastructure in time. So we feel good on both fronts that the things that are new and unusual if you will are being looked at by the DOL and yet we have infrastructure in place that can accommodate most of what we anticipate we needed.

Next we have Ryan Krueger of KBW.

Just one follow up on the level of commission option. Do you think it would be feasible to have the level of the commissions to be similar to I guess the average all-in commission that you have now under that type of option?

That is the discussion that we’re having with our product providers is to equalize if you will the commissions of a product set sort of on a weighted average of what we’re experiencing today. That’s correct.

And I will just add to that, it may mean to some degree that there is movement by product if you will toward averages on both asset and account based – and sales based, all three of those combined. So part of it will be -- in the aggregate I think your point is, the answer is yes. You might see different composition than you see today by components.

And then I had a question on productivity of the sales force, the last couple of quarters it’s been pretty strong. Do you feel and you’ve always talked about a 0.18 to 0.22 range, I guess you’re kind of starting to run more towards the upper end of that, do you think that’s sustainable going forward?

We're excited about the progress that’s been made and we are always in process of trying to improve productivity to the upper end of that range. We've been successful in that as you can tell not just for a single quarter but for several quarters now. And I think that reflects the excitement level our sales force, great field leadership have stepped-up in an incredible way throughout 2015 not just in this quarter. And so we're encouraged by that and believe that we do have some momentum that’s sustainable into the future. So we hope to stay within that range, toward the upper end of that range.

Last one, RBC ratio, the release said over 400, I think the comment last quarter was over 430. Can you just discuss – I guess how much the RBC ratio declined and I guess how you feel about where it stands at this point?

Sure, and the specific reason for the decline was that as part of our plan to go ahead and increase our capital deployment this year to 50 million, we went ahead and extracted certain dividends from the Primerica Life, so that was a key driver for the decline. I will say the other component of the decline is the fact that we’ve been having very strong life production and obviously on a short term basis that does create some statutory strain but in the long run obviously creates a far more capital than the short term strain. With that said, we really do think the ratio is going to be somewhere in the low 400s, let’s say between 400 and 420, generally. There are some things that will happen periodically, just based on the timing of when we take out statutory dividends et cetera but for the most part we think we’re going to be in that low 400s range in the near term.

Next we have Steven Schwartz of Raymond James.

Just a quick one are back on the levelized commission before I ago up north. The issue here – is the issue here so much getting like – Franklin full disclosure, Franklin came to Raymond James and discussed this with us. Is the issue getting Franklin to do it or is the issue really getting Franklin and Legg Mason to match each other?

Again in working with our product providers we do believe that we have a single product provider that can accomplish that, that had the coverage of asset classes, then that would give us what we need. I can’t speak on behalf yet of how the product providers might work together but clearly we would engage them in that conversation, and that would be a benefit. I think the broader our product set is, up to a certain limitation of too much complexity would help us. So clearly we’re leaning in that direction but we started talking with our product providers individually and get a read on their reaction and then talk to them about working together to try to give us and the rest of the industry, that might use this model by the way, a broader product set.

I have a series of questions on Canada. While we discussed the DOL I think the Canadian thing is happening sooner. So everything I've read on the Internet and of course everything on the Internet is true – is that the new test is definitely coming January 1. I think you mentioned that it's -- I think on the last call you mentioned that the tests are going to be broken up in the four segments instead of one and everything I've read suggests that the test is going to be a lot harder than it has been. Do you agree with those statements?

Well I think you’ve captured, Steven, our concern that with the change was so radical, if you will, that it was impossible to predict the impact, and so you have to assume that a modular test, four mini tests is more difficult to pass than one larger test because if you fail any one of the modules, you are out until you pass that module. On the positive side, if you pass three modules, you only have to go back and take the one you failed. And so there is some give-and-take in this but the concern that we had was we couldn't figure out how to predict the impact and even though we were sure about regulators that the intent was not to make the test more difficult, we felt like the structure of the exam was going to make the test more difficult to pass, even if the questions were of similar difficulty level. And of course as you know we feel very strongly about that, and brought legal action against two provinces as a result. One thing that has happened since we last spoke is that we have settled those legal actions and dismissed our cases and the reason we’ve done that is because we were able to negotiate a transition process beginning with the change that you mentioned in January 1 going for a period of time where we could ease into the new process in a number of provinces by continuing to have compensatory score in a single exam rather than a modular exam. As we change those, there will be some changing questions in administration but we could start to see impact on a transition basis over a period of time. There is not an exact period of time, there's a number of exam…

So it seems lot of my question looks like you’re going to be up in here but I do want to ask – this one, with regards to Canada. Do you know off the top your head, what percent of recruits in newly licensed reps were in Canada this quarter?

Generally if I can just -- I don't know the answer for this quarter, we can look at up, but generally what we see is Canada does run in the normal kind of 10% rule of thumb number for recruiting and because the process is longer there we see the licensing pull-through slightly lower in Canada, so you’ve got about 10% of recruiting, 8% to 9% of licenses are general rules of thumb, we have to go back and look at those numbers exactly for the third quarter.

And then one for Alison, the reserve adjustment – what line item does that affect?

It will go through adjusted direct premiums and it would go – and net premiums for that matter and then it would also go through benefits and claims.

Do you have those numbers handy?

I believe it was just about over 3 million of adjusted direct premium increase and the net would make it about 1.6 to benefits and claims for a net pretax of 1.4.

I am sorry, it was – adjusted was 3 million, net premium was how much?

1.6 increase.

And then the benefits and claims?

I am sorry – no, I am sorry, let me repeat that. The 3 million is the same for adjusted direct premiums and net premiums, and then the 1.6 is the increase to benefits and claims for a net of 1.4. End of Q&A

At this time we have no further questions. This will conclude our question-and-answer session and today's conference call. I’d like to thank management for their time today and we thank you all for attending today’s presentation. At this time you may disconnect your lines. Thank you. Take care and have a great day everyone.

Thank you.

Thank you.