Good morning and welcome to the Primerica Third Quarter 2016 Financial Results conference call. All participants will be in listen-only mode [Operator Instructions]. After today presentation, there will be an opportunity to ask questions. [Operator Instructions]. Please not this event is being recorded. I would now like to turn the conference over to Kathryn Kieser, Executive Vice President, Investor Relations. Please go ahead.

Thank you, Alison. Good morning, everyone. Welcome to Primerica's third quarter earnings call. A copy of our earnings release, financial supplement, presentation and 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 will 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. 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. Risk and uncertainties that could cause actual results to differ material from those expressed or implied are discussed in the Company's 2015 annual report on form 10-K, as reported quarterly by our reports on form 10-Q. Now I will turn the call over to Glenn.

Thank you, Kathryn and good morning, everyone. Today, I’m pleased to report another strong quarter performance at Primerica. Beginning on Slide 3, you can see in the third quarter of 2016, operating revenues increased 8% to $383.7 million and net operating income increased 17% to $58.1 million from the prior-year period. Results were driven by strong trends in the Term Life segment including 13% growth and adjusted direct premiums and clients experience below historical levels. These dynamics drove the 25% increase in Term Life income before taxes year-over-year. In the third quarter, our investment in savings products, our operating posted the first year-over-year quarterly gain in 2016. Solid earnings in the third quarter as well as ongoing share repurchases drove a 25% increase in diluted net operating income per share to $1.22 and ROAE expanded to 20.3% from the year-ago period. We expect ROAE to be in 19% range for the full-year in 2016. During the third quarter, we repurchased $41 million or approximately 743,000 shares of Primerica’s common stock. Year-to-date we have repurchased $150 million or approximately $3 million of our common stock. We expect to repurchase another $125 million to $150 million in 2017 in addition to paying stockholder dividends. In addition to robust financial performance, we surpassed a very positive distribution results we achieved in the third quarter last year. Page 4, you can see our life-licensed sales force grew 115,345 representatives at the end of the third quarter up 10% from the prior period and up 3% from the end of the second quarter. Year-over-year recruiting of new representatives increased 12% and new life insurance licenses were 5% higher, indicative of continued higher recruiting levels and licensing focus. On a sequential quarter basis, recruiting increased 13% and new life insurance licenses declined 4% from the higher…

Thank you, Glenn and good morning, everyone. Today, I will cover the earnings results for each of our segments and conclude with a Company-wide review of insurance and operating expense. Starting on Slide 6. In the third quarter, our Term Life segment continue to experience strong performance with margins expanding to 20.1% the period. Operating revenues and adjusted direct premiums both increased 13% year-over-year, while operating income before income taxes increased 25% from the third quarter a year ago. The benefit in claims ratio a 57.6% bit low for the quarter reflecting incurred claims that were approximately $3 million below historical level, a portion of which comes from the implementation of a new claims adjudication system for disabled lives. The benefits in claims ratio continues to benefit from YRT reinsurance rate reductions that we negotiated on 2014 later issue years. Slightly unfavorable persistency experienced in the third quarter also contributed to the lower benefits in claims ratio from smaller reserve increases, but led to a modest increase in the DAC amortization ratio for the quarter to 15.4%. The net insurance expense ratio for the period was 7.5%, which continues to decline at fixed cost or spread over a larger enforce premium base fueled by strong sales in recent period. On a sequential quarter basis, Term Life revenue increased 6% and both income before income taxes and the Term Life operating margin were consistent with the second quarter of 2016. The DAC amortization ratio increased and the benefits in claims ratio declined from the prior quarter due to seasonally strong persistency in the second quarter and favorable incurred claims in the third quarter. As we have discussed in the past, adjusted direct premiums should naturally grow over the next several years by a minimum of 10% annually as a result of…

Thank you. [Operator Instructions]. The first question comes from Mark Hughes with SunTrust. Please go ahead.

Thank you good morning. On the recruiting front, 12% growth on top of 34% growth in this quarter last year, you got a nice boost from the convention last year and you are able to top that. My usual question is anything one-time and any unusual programs in place to boost recruiting or is this sustainable?

Well we did not have any specials going on, any kind of unusual one-time incentives during that period. We are very pleased obviously with those results and I have to give the credit to our field force leadership who remains very focus on recruiting, since that convention and continuing to build growth on top of growth. A lot of our focus is trying to make sure that we recognize what it takes to grow, and we put all of the fundamentals in place, as well as the leadership focus both here at the company and among the sales force. So there is nothing unusual, there is no unusual incentive or timers in that, we get some very strong growth in our fundamental business that created that Mark.

Okay. The insurance expenses, I think you had mentioned, that you got some leverage from the growth, it looks like on an absolute basis, in the term, segment insurance expenses have been flat for three quarters. Are you going to be able to maintain that leverage, kind of keep them at the relatively low level compared to revenue?

I do believe so, in fact, we do think that number should continue to improve as we continue to build out the in force of our business. One other thing that is right, a little bit of increase this year versus last, does have to do with what I was discussing with our mobile applications and internet site. So we allocate that particular cost both the revenue that we get and the cost associated with it, between Term Life and ISP, largely based on agent count. So the vast majority of the cost - 80%of it goes to Term Life. So as we said, we are spending quite a bit of money on maintaining and further developing those tools and in fact we believe part of the reason that they are getting such tremendous use by our representative is because we keep putting better and better content out there to support the tools. So while the revenues have gone up, the expenses are keeping pace with that revenue growth.

Right. And you say from a cost-ratio perspective that should improve as you get more growth?

That overall, what I'm specifically talking about is the year-over-year growth in sort of the expense number, which has a lot to do with the technology build out. That said, we do believe that our premium base, out in force base will grow faster than the expense structure does overall for the Term Life business. So yes, we expect that ratio to continue to decline. Obviously, as you have seen in the past, we you have some timing by quarter, we have sort of a larger expense structure in the first quarter than in quarter just because of seasonality. But overall, for an annualize basis we expect it to continue to stay the same or decline.

Likewise, your sales-based commissions were a little lower than the trend this time. Was that a mix issue or something else?

I think you are referring to ISP and they were actually a little bit higher than historically; I mentioned it briefly in my prepared comments. We did have a one-time year-to-date catch up or true up involving the specific relationship with one product provider, which all hit this quarter versus the last three quarters. So that side it's a little bit up a little bit this quarter and as I said in my prepared comments, we do expect that to normalize back next quarter.

Your point about the $15 million, could you walk through that again and I think you said it had a negative impact on margins. But, on an absolute basis, does the extra $15 million in revenue bring some dollars to the bottom line?

Yes, it absolutely does, and the reason we were highlighting some of the items about the negative on the margin and they are very modest whereas if you look at 2016 the experience that we have had has been a largely improving Term Life margin. And so what we definitely wanted to indicate to the street is that we think the margins will continue to remain very strong. We don't expect to see as much margin expansion in 2017 as we saw in 2016 largely because of this dynamics. But you are absolutely correct. We do believe that it does actually create more bottom line income, just a slightly lower overall margin.

And that $15 million, have gotten from you're IPO, you are ceding less to the reinsurer? Is that it?

Correct. So, up until the end of this year, obviously we sell level term products and when they come to the end of their level term the policy can either renew, it can convert to something else we have available in newer products or of course it can lapse. And to the extent that a policy has renewed or converted that has been ceded to the IPO reinsurers consistent with any other policies of 80%, effective 1/1/2017, the policy reaches that phase for the first time, we will no longer cede that risk. And so that is why you are seeing the changes, so it's essentially there will be less - line item that’s ceded to IPO reinsurers, that will go down, so adjusted direct premiums will go up. Additionally, you will see an adjustment on the ceded premium line, because we no longer received reimbursement if you will from the IPO reinsurers on YRT business, third-party business that we had enforced on that same business, same block.

And the $15 million impact was full-year 2017?

That was a full-year 2017 and it will emerge over the year, it will be very small in the first quarter, and start rolling after that.

Okay, thank you.

You are welcome.

Our next question will come from Adam Klauber of William Blair. Please go ahead.

Thanks good morning. Obviously good recruiting, good sales force growth. The registered reps are growing but obviously, the sales force is growing at a much faster pace. And I realize they do not usually grow at the exact same pace. But, at some point, would you expect the growth of the registered reps to start picking up more in line with the overall sales force?

I think like several things in that pipeline that creates our distribution system and Adam, you have delays that are built-in and one of the delays is actually we see an unusual increase or an unusually large increase in our life-licensed sales force. There usually is a lag before that starts to show up in the securities license sales force. On average, it's about two years from the time a person gets a life-license until they get a securities license. There is a lot of deviation from that but that's the average. And so you should expect a lag in there. I do think some of the uncertainty in the ISP world with the DOL regulatory change has probably given us a small headwind on that as well. There is a little bit of a wait and see attitude, I think throughout our industry that might be slowing that down just a little perhaps extending that delay. But overall, we would expect to see that pull through and with that delay accounted for we would expect to see our security sales force begin to grow and play a little catch up to get to the same trajectory as our life sales force.

Great. That's very helpful. And then, on the DOL, is your product lineup under the DOL, which is starting at 2017, is that mainly set at this standpoint? Is there still a lot of work to get the products lined up? Where are we in that process?

As we said in the prepared remarks, it’s an unusual circumstance since the election with a lot of new uncertainty introduced, but we are continuing to operate under the expectation until we are notified differently that the rule will be implemented as written and on time and so that makes your question important. Fortunately, we have a fairly narrow product set, because of the way our business has been run traditionally and so that has made it easier for us to look forward and say what would a future product set look like compared to today. We have kind of fewer products to deal with and to consider and to make sure we can meet all the rules and regulations. So we are going through that process there are a couple of product lines, or product providers that we are in discussion with to try to make sure that we are all on the same page, about our view of what is required by the rule, their view of what's required by the rule. But we are not anticipating anything that's major as far as product line changes with our providers. They are not all nailed down perfectly yet, but we are not looking for a lot of disruption on that front.

Okay. And then on the buyback, I realize you are spending more money next year getting, obviously, in compliance also. I think Alison talked about worth more on the digital platform. If next year goes well, is that potentially conservative or do you think that's a pretty good range?

The 125 to 150?

Yes.

Yes. I think the 150 is where we have historically been, I say that over the last several years so I think that's a range we think is appropriate. So I think 125 to 150 is generally in that range, I wouldn’t necessarily expect it to be much different than the 150 today. Although the company does produce a lot of free capital and to the extent, there was an opportunity we do believe that we have ways to create capital if needed. Anyway, our general goal has been to try to maintain a level fairly consistent from year-to-year so that investors and people looking at the stock can understand sort of what our game plan would be.

Okay. Great. Thanks very much.

[Operator Instructions] Our next question is a follow-up from Mark Hughes of SunTrust. Please go ahead.

On the DOL rule, I assume you have kept close tabs on all of these things and are getting real-time feedback on them but what is your sense of what the new administration - had there been any real comments on the DOL fiduciary rule specifically? Any sense of either the administration or anybody who might be in the administration, whether they have got a particular view on this. I appreciate your point about the uncertainty and I would definitely agree with you. But I wonder whether there is any direct intelligence or commentary that bears on this.

Right, well Mark, in true Primerica fashion, we stay with our finger on the pulse of all possibility, so yes we have done a lot of work, at leading up to and since the election. And so there is commentary on record, prior to the election from one of the advisors of the new administration that said they have said they were not in favor of the rule. And would likely take some action, were the administration to change. So the recent indication prior the election that it is on the radar and it could lead to a change in the rule. Kind of an anti-excessive regulation statement that’s been made in the DOL rule mentioned specifically. As we have done our homework, there are lot of avenue where that could happen. Of course I guess we give the more avenues that it could happen, it increases the likelihood that something may happen, will be a logical conclusion. But President Trump will appoint a new DOL secretary and that could lead to delay in the rule by Presidential order, by DOL Secretarial order, that could be delayed a short period of time or extremely long period of time as we understand it. And the new Secretary of Labor could be in place fairly quickly after President Trump takes office. That is one possibility. Congress could walk the rule through legislation is another possibility, the litigation is taking place now, could take a little bit different track if the DOL or Department of Justice decided not to pursue it as aggressively or defend it as aggressively. And we have had indications from our advisors in DC that it is on the Trump transition team's radar. At least it's on a list, we don’t know exactly what that means and it’s really hard to speculate. But we do know there are number of opportunities and it is something that’s been publically discussed.

Thank you for that detail. Do you happen to know from a congressional standpoint, is this something that would need 60 votes, or is it one of those budget items that only would need a majority in the Senate?

I'm familiar with that one Mark, I don’t know that one for sure.

Okay. Thank you very much.

Ladies and gentleman this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Glenn Williams, for any closing remarks.

Thank you Alison, thank you everyone for joining us today. We appreciate your time.