Primerica, Inc. (PRI) Q4 2025 Earnings Report, Transcript and Summary

Greetings. Welcome to Primerica's Fourth Quarter 2025 Earnings Webcast. [Operator Instructions] Please note that this conference is being recorded. At this time, I'll turn the conference over to Nicole Russell, Head of Investor Relations. Thank you, Nicole. You may begin.

And thank you, operator. Good morning, everyone. Welcome to Primerica's fourth quarter earnings call. A copy of our earnings press release issued last night, along with other materials relevant to today's call are posted on the Investor Relations section of our website. Joining our call today are our Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Tracy Tan. Our comments this morning may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. We assume no obligation to update these statements to reflect new information and refer you to our most recent Form 10-K filing as may be modified by subsequent Forms 10-Q for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied. We also reference certain non-GAAP measures, which we believe provide additional insight into the company's financial results. Reconciliation of non-GAAP measures to their respective GAAP numbers are included in our earnings press release. I would now like to turn the call over to Glenn.

Thank you, Nicole, and thanks, everyone, for joining us this morning. 2025 proved to be another record year for Primerica, evidenced by solid earnings growth and strong cash flows that reflected the strength, stability and balance of our business model. Our sales force also set records in several areas, including $968 billion in total in-force protection for our clients and a new high watermark as client asset values reached $129 billion. Stockholders were rewarded with 79% capital return through a combination of share repurchases and dividend payments, along with a 200 basis point increase in ROAE. Highlights of our financial results included a 16% increase in fourth quarter adjusted net operating income and a 22% increase in diluted adjusted operating income per share. On a full year basis, adjusted net operating income increased 10% to $751 million, while diluted adjusted operating income per share of $22.92 increased 16%. Let's take a look at distribution results. Both recruiting and licensing activity were down compared to the fourth quarter of 2024 and on a full year basis. These results reflected the uncertainty associated with the 2025 economic environment as well as challenging comparisons to 2024's record-setting activity. We ended the year with 151,524 life-licensed reps, largely unchanged from the prior year-end level. Included in this group were 25,620 representatives who hold a securities license, enabling them to assist clients with their long-term savings and retirement goals. As we start 2026, we see our business opportunity continuing to resonate with new recruits, particularly its appeal for supplementing household income. We expect full year growth in both recruiting and licensing, which should translate into approximately 1% growth in our life license sales force in 2026. Turning next to production. Sales results were mixed in 2025 with headwinds from higher cost of living pressures adversely impacting demand for Term Life insurance coverage, while investment and savings product sales continue to set new records. Starting with Term Life, we issued 76,143 new policies during the fourth quarter, providing $26 billion of new term life protection for our clients. On a full year basis, the number of new policies issued declined 10% compared to the prior year record levels, while estimated annualized issued term life premiums, which include coverage additions as well as newly issued policies declined 7% compared to the 12 months ending December 31, 2024. We believe it's useful to look at annualized issued premiums to get a more complete understanding of the financial impact of our Term Life business. As we look at 2026, we believe cost of living pressures have started to ease as wage growth begins to outpace inflation. We see small but consistent monthly improvements in the Primerica household budget index data. Our sales force is well positioned to help middle-income families who could benefit from U.S. tax relief as well as moderating inflation and real wage gains in both the U.S. and Canada. We continue to support our representatives with targeted sales training to enable them to better assist clients in prioritizing financial needs, and we believe these efforts will result in productivity improvements over time. Until we see clear evidence that these trends are materializing, we are maintaining a conservative outlook for full year policy growth during 2026 in the 2% to 3% range. Turning next to ISP results. Performance remains very strong, reflecting the importance of the financial education provided by our investment license representatives in helping clients stay focused on long-term goals and saving for the future. During the fourth quarter, investment and savings product sales of $4.1 billion grew 24% compared to the fourth quarter of 2024. Results for the full year were just as strong with total sales of $14.9 billion, up 24% on a year-over-year basis. ISP growth continues to be driven by strong demand across all major product lines. This momentum is supported in part by favorable demographic trends as clients approaching retirement seek annuity solutions that provide income stability and protection as well as by increased interest in the broader range of investment options now available on our managed account platform. We also see greater engagement from our sales force as representatives recognize the opportunity in this product line and the benefits of diversifying their business. Client asset values ended the year at $129 billion, up 15% compared to December 31, 2024, on solid annual net inflows of $1.7 billion and sustained momentum in the equity market throughout most of the year. Looking ahead, we believe favorable demographic trends will remain supportive for several years. We also recognize that this business is sensitive to market equity -- to equity market conditions and that uncertainty remains elevated. Preliminary January results reflected continued growth. We remain mindful of a possible market downturn and maintain a conservative approach to our full year sales projection. We currently expect sales growth of around 5% to 7% during 2026. Finally, we remain well positioned to help middle-income families obtain a new mortgage or refinance to consolidate consumer debt. In the U.S., we ended the year with nearly 3,500 licensed representatives who closed more than $500 million in mortgage loans volume in 2025, a 26% increase compared to the full year 2024. We also bring refinancing opportunities and new mortgages to our Canadian clients with a mortgage referral program and saw more than 18% growth in volume on a year-over-year basis. As we approach our 50th anniversary next year, we're already laying the groundwork for our 2027 convention, which we expect to be our largest event ever. We kicked off 2026 with a senior leadership meeting that included over 1,000 participants. We use this forum to reinforce our long-term vision, including the importance of building a balanced business by growing across all major product lines while also strengthening recruiting and licensing to expand our distribution footprint. All our efforts in 2026 will be focused on accelerating momentum, and we're optimistic about the opportunities ahead. With that, I'll hand it over to Tracy for the financial results.

Thank you, Glenn, and good morning, everyone. Overall, we delivered very strong financial performance in 2025, outperforming on all major fronts, including record adjusted operating revenues of $3.3 billion, up 8%, record net operating income of $751 million, up 10% and record earnings per share of $22.92, up 16% compared to full year 2024 results. This performance reflects the benefit and balance of all of our fee-based businesses and our Term Life business, which exhibits financial characteristics similar to a fee business. They also demonstrate our capital efficiency and consistent execution. The strength of our model was also evident in a 200 basis point increase in our return on adjusted equity to 33.1% this year, led by accelerating growth in the investment and savings product segment. The ISP segment has performed exceptionally well with pretax operating income growing at a compound annual rate of 21% over the last 2 years, and we continue to see meaningful opportunities ahead, driven by retirement savings needs. The financial results in ISP are entirely fee-based with sales commissions and advisory fees driving revenue growth. In the Term Life segment, a substantial portion of revenues continue to be driven by recurring premiums on a large in-force block of life insurance policies. When combined with our use of reinsurance to substantially eliminate mortality risk, the income profile of this segment drives sustainable earnings performance, resulting in a stable business with characteristics similar to those of a fee-based model. Adjusted direct premiums continue to drive Term Life revenue growth to a total of $457 million in the fourth quarter. Pretax income for the quarter was $147 million, up 5% compared to the prior year period, driven by the impact of a remeasurement gain in the current period compared to a remeasurement loss in the prior period. Keep in mind that even with a 15% decline in the number of issued policies during the fourth quarter, both direct premiums and ADP still grew in the period, reflecting the stability of our in-force block and the benefit of a substantial portion of revenues being generated by recurring premium payments. Turning to our key financial ratios. The benefits and claims ratio for the quarter was 57.8% compared to 58.6% in the prior period. Benefits and claims in the current year period included a $5 million remeasurement gain, reflecting a combination of favorable mortality experience and lower persistency. Lapse rates remained elevated relative to our long-term reserve assumptions, although stable on a year-over-year basis. We believe that persistency will gradually normalize as middle-income families adjust to current economic pressures, and we will continue to monitor our assumptions as policyholder experience continues to evolve. The DAC amortization and insurance commissions ratio remained stable at 12.2%, while the insurance expense ratio at 8.5% was up modestly compared to 8% in the prior year period, primarily due to expense timing and ramp-up on technology investment at the end of the year. Finally, the Term Life operating margin for the quarter was stable at 21.5% compared to 21.3% in the prior period. Looking ahead to 2026, we believe the fundamentals of our business remain strong. We expect adjusted direct premiums to grow approximately 4% as the benefit of co-insurance agreement continues to fade. Key financial ratios should remain stable with a benefits and claims ratio at around 58% and the DAC amortization and insurance commissions ratio at around 12% to 13%. We expect full year operating margin to be around 21% with some possible seasonal variation between quarters. Turning to the Investment and Savings Products segment, our fastest-growing segment and an increasingly meaningful contributor to consolidated results. To put this in perspective, ISP represented 32% of consolidated operating revenues in 2022, now increasing to 38% of revenues in 2025. Focusing on fourth quarter results, operating revenues were $340 million, up 19% compared to prior year period. Pretax income increased 23% to $101 million. Sustained equity market appreciation continued to support strong sales activity and pushed client asset values higher. Sales-based revenues increased 21%, slightly outpacing the 17% increase in commissionable sales, primarily driven by strong demand for variable annuity. Asset-based revenues were up 21% year-over-year compared to a 14% increase in average client asset values, reflecting a favorable mix shift towards products that generated higher recurring fee-based revenues. We continued to experience higher demand for U.S. managed accounts due to the increased appeal of these products and Canadian mutual funds sold under the principal distributor model, which was introduced a few years ago. Commission expenses for both sales and asset-based products increased relatively in line with revenues. The continued growth of our fee-based ISP business has accelerated the company's overall growth profile with recurring commissions and investment advisory fees driving strong returns on invested capital. In the Corporate and Other Distributed Products segment, we recorded a pretax adjusted operating loss of $0.3 million during the quarter compared to a loss of $1 million in the prior year period. The largest factor contributing to the year-over-year change was higher net investment income from growth in the portfolio, partially offset by higher operating expenses. Finally, consolidated insurance and other operating expenses were $163 million during the quarter, up 7% year-over-year. The growth in expenses was driven by a combination of higher variable growth-related costs in the ISP segment and the ramp-up in technology investments at year-end. We expect full year 2026 consolidated expenses to grow around 7% to 8%. The first quarter expenses on a dollar basis is expected to come in a little higher than other quarters due to annual equity compensation vesting and towards the lower end of the first year guidance percentage range. Our invested asset portfolio has a duration of 5.2 years. The portfolio remains well diversified with an average quality of A. The average rate on the new investment purchases in our life companies was 4.92% for the quarter with an average credit rating of A+. The net unrealized loss in our portfolio has improved modestly, ending the December quarter with a net unrealized loss of $113 million. We believe that the remaining unrealized loss is a function of interest rates and not due to underlying credit concerns, and we have the intent and ability to hold these investments until maturity. We continue to generate strong excess cash, driving by superior growth of our fee-based ISP business and the steady premium contribution from our large in-force block of insurance policies. Our holding company ended the quarter with $521 million in cash and invested assets. Primerica Life's estimated RBC ratio was 455%. In 2025, we returned approximately 79% of net operating income through a combination of share repurchases and dividend payments, a level that is typically well above life and health insurance peers, underscoring our capital-light and disciplined approach to capital deployment. In closing, we're in a strong financial position. In both good and bad economic times, Primerica has been able to deliver solid earnings, strong cash conversion and superior return on equity. With that, operator, please open the line for questions.

[Operator Instructions] And the first question comes from the line of Joel Hurwitz with Dowling & Partners.

I wanted to start on your term sales outlook, the 2% to 3% growth for '26. Just want to understand what's sort of driving that because it would suggest pretty strong growth off of the sales levels that we've seen in the back half of '25.

Yes. And Joel, I think you'll see that emerge over the years that increasing momentum is what we're anticipating as the year goes by. We do believe that -- we went through some unusual circumstances in 2025 with a lot of economic and policy uncertainty as well as the continued cost of living pressures. I think some of that uncertainty, I don't know whether it's clarifying or not, but it's probably being accepted, if nothing else. And we do believe there's a little good news on the purchasing power front in middle-income families as we are seeing in our own household budget index that I referenced in my prepared remarks, we saw it up consistently last year, improving 10 of 12 months and midyear it crossed over the 100% mark, which is the baseline to determine that purchasing power is now outstripping the cost of living in the kind of narrow context that we use for middle-income families. So that is a good leading indicator, we believe. As I said, we want to see that work its way through the system, and that may take some time. But overall, I do think the middle-income families are going to have just a little more flexibility in their budgets. We are working hard to get out and be the good news bearers of that to make sure middle-income families see that and before that money is put to use or just not recognized, put it to use toward protecting families and investing for the future. So we do think the conditions are a little different in '26 externally in the environment, and we're working hard to play into those advantages. So we do think we'll see some increasing momentum as the year goes by.

Got it. That's helpful. And then I guess just sticking to sales, right? It's -- term has been a little challenged in the back half. ISP continues to be very, very strong. I guess any theory on your part on why there's the diverging trends in the 2 businesses? Is it change in the targeted consumer for both? Is distribution shifting more towards retirement? Just any thoughts on why you're seeing those trends in the 2 businesses?

Yes. I would say that within our middle income market, there are segments of the market that react differently to the conditions. Our investment business has helped. There's a tailwind from money in motion being moved from retirement accounts, as Tracy mentioned in her remarks, particularly to annuities that have income guarantees as we all age and get closer to retirement. So you've got one segment of the market that's kind of looking at their month-to-month budget. They're the buyers of term insurance for the first time and often those that are beginning to invest systematically, and then you have a separate segment that's moving money to a more appropriate place that they've accumulated over their lifetimes. And so you get 2 different sets of behaviors. And fortunately, that's what I love about our business model because they often complement each other. And when one is weak, the other is very strong, and that's exactly what we're seeing now. So it's not both being driven by people investing $25 to $100 a month or buying insurance for $25 to $100 a month. The investment segment is being driven more by the big dollars in motion right now. And that has a different set of stresses and is more driven by the demographics. I think the good work that we've done in preparing with our product sets and training, expansion of our sales force and also the market returns, the strong market returns are clearly a tailwind for us.

Our next question is from the line of Wilma Burdis with Raymond James.

Could you talk a little bit about the potential impact of AI on your business model, given this is a hot topic in the markets right now, especially as in regards to salespeople?

Certainly. It certainly is a hot topic. And of course, we're monitoring that as we see the discussions going on and well aware of it. We see AI as an opportunity for improvement of our business. We do think we can increase efficiencies and reshape workflows, both in our home office processing as well as in our sales process and make the sales process more intuitive for the reps and the clients. So there are a lot of opportunities to use it. In fact, we already have AI in play in a number of areas. For example, in licensing, we've got AI-powered training tools that personalize study paths to help us improve pass rates. We've got employee productivity tools. We've got language, AI language tools to help in translation to our various market segments that speak different languages. So we're clearly seeing benefits from that and have plans to use it to improve our financial needs analysis and our quoting system as well as our client app. So we are very positive on the impact of AI. The negativity that we've seen in recent days or weeks is a question of can AI replace our business model of what we do or the other business models that are being negatively impacted. And I think it's interesting because in looking at the discussion that I see, the term insurance, I think, on the insurance side has seemed to be a more simple product and easier to understand, which is true. And often someone comes to the conclusion that, easy pickings for AI to take that out because that's the simpler type of life insurance product. but it's not necessarily a simpler sales process. There's still the evaluation of a client's family's need, the personalization of the solution and most of all, the motivation to act. And we see that as our clear advantage. It's an advantage with current models. I think it will continue to be an advantage as AI becomes more prominent because we have the advantage of the relationship with clients. Remember that most of our reps are dealing with clients that had a preexisting relationship, the empathy that those reps have as well as the common life experience and ultimately, the motivation. And we don't see that as a threat of AI anytime in the near future. So we think we can benefit from it, but we think we're insulated from the downside and the uniqueness of our relationship business probably gives us an edge in the marketplace that maybe others might not have. So we don't feel threatened by it, but we're looking for the opportunities we can create around it.

Great. Could you dig in a little bit more on some of the distractions that you're seeing in the middle market? Is it equity market volatility, changing political environment, more financial? And can you just talk about -- are you seeing some of these letting up near term? Just maybe give us a little bit more color.

Well, as I said, if you look at the 2 extremes of the middle market that we serve, you've got those with extremely tight budgets. And we do believe that we're seeing a little more economic breathing room in those budgets, and that's the main distraction as we go into homes and help people find money within their budget to reprioritize and repurpose because almost nobody has had extra money in their budget over the last 3 or 4 years in the middle market. And so we have to help them reprioritize and move -- let go of less important purchases in order to prioritize protecting their family and investing for the future. And we are starting to see some of that cost of living pressure ease as wages outstrip the increasing cost of living, and that increases their purchasing power. But also some of the other distractions, the uncertainty of everything from tariffs to other governmental policies and economic policies, I think people are starting to get a little more, I don't know, comfortable, but at least used to them, and they're not frozen in their tracks quite as much. And so that's what we're anticipating may give us a little running room on the term side of the business. On the investment side, we've been in a strong market for a long time. So we're a little hesitant just to project that market returns are going to continue at the rates they have in the past throughout the year. So we're stepping back a little bit just to accommodate any kind of market correction that might occur. But as far as the demand for the product, other than that, we see that demand continuing. We think we've got the right products in the right place at the right time for the demographics and the movement. And I would say that the industry is experiencing -- we're not unique. The industry is experiencing similar trends. So I think that we've got some running room on the ISP side unless the market returns change radically during the year.

Our next question is from the line of Dan Bergman with TD Cowen.

Just maybe to start following up on the Term Life sales. I think last quarter, you mentioned a number of initiatives such as product changes, faster underwriting and issuance and more sales force training with the aim of offsetting some of those external pressures and improving the term sales. So was just hoping for an update on how those initiatives are progressing and any updated thoughts on maybe how soon we might expect them to have an impact on the sales trajectory?

Yes. I think all of that, Dan, is tied to the previous discussion is it's a little bit different sales approach when budgets are extremely tight. And what we try to do is change our messaging and our training to help our representatives understand how to navigate that with families. Probably a little different flavor now as we see and anticipate that the purchasing power of middle-income families will improve, we're trying to play into that. We're trying to be an early arrival and be the first to let families know that we see this coming overall, not happening to every family, obviously, but families ought to be looking at their budgets and they ought to be looking at their incomes and seeing if a little breathing room is emerging around tax time, we don't anticipate that there probably be some larger tax refunds than people anticipated. And what we want to do is equip our reps to have that discussion with families so that, that money just doesn't flow through their budget almost unnoticed, which can happen in anybody's budget. And so now we're talking with our reps and challenging them to be out early, be having this discussion, don't wait on a client to call and say, "Hey, I suddenly see room in my budget. Can you come help me?" And they may never see it. And so we need to be proactive and get out to them. It's very early. And so what -- how to measure the impact of that is still too early to tell, but we are anticipating that will be a positive during the year. So that is a change. And as we message to our reps and train them around this and message to our clients, we're trying to take all that into consideration.

Got it. That's very helpful. And then just on the sales force, I think growth was flat last year following a period of elevated growth in the past couple of years. I think you guided to 1% growth in 2026 in the prepared remarks. Just any more color on how confident you are in the ability to grow the sales force from the current base of about 150,000 agents? And do you still expect a higher level of growth beyond this year and over time? And as we think about those drivers, I mean, do you feel that improved recruiting, the licensing rate or retention, which of those would be kind of the biggest potential opportunity?

Yes. We do believe, overall, Dan, that there is a much larger market out there that we're addressing. And that means that there is no limit that we can see in sight on our opportunity. So we always get the question because our sales force is so large and a larger sales force is a little hard to grow percentage-wise. But we've been asked, can we grow any larger since we crossed 100,000. And we continue to believe that we can. Now some years are going to be more positive than others as we've seen according to what the conditions around us are. But we believe there's a demand for our opportunity. It's certainly very successful. Our existing reps were more successful last year than they've ever been before in the financial rewards from the opportunity we offer. It's very attractive both on a part-time basis to offset the expenses of families. It's a great part-time opportunity, but it's also a great career, and we've got a tremendous track record on both fronts. So we think we can continue to grow. Obviously, the bigger we get, the more lift that takes. We replaced the attrition first. Our attrition rates are very stable. I don't see -- we don't see that those have changed very much, although they do tend to fluctuate a little bit year-over-year based on previous year's licenses, normally licenses in the U.S. renew every 2 years. So we'll be renewing this year the 2024 record 7% growth in the sales force in 2024 is coming through as license renewals in 2026. And so that just means we'll have to give extra effort to that because it's a larger number. But we don't really anticipate the nonrenewal percentage of total sales force to change radically. But we see it, we're aware of it, and we're dealing with it. So we do think that our opportunity is attractive. We think that we can get that message out there and demonstrate our track record. We think that the lack -- or the more certainty, I don't think things are certain, but I think they're more certain this year in the marketplace as far as economic and governmental policy, less disruption, all of that probably helps us. We think we get back on a growth track this year.

Our next question is from the line of Jack Matten with BMO Capital Markets.

Just one more follow-up on the Term Life growth outlook. The cost of living pressure is starting to ease. Are you seeing that play out so far this year in any of your sales or recruiting growth metrics? Or is it really more that just kind of the leading macro indicators are getting better and that gives you more confidence in the outlook for this year?

Yes. It's very early, Jack. We -- our January results, which were still tough comparisons because we had extraordinary momentum not only during the calendar year of 2024, but it was really through January of '25 before we started to see real headwinds that slowed our momentum down in both distribution building of our sales force and the term business. But we had a strong January, and encouraging January. And I think it's very early, but we do believe there's an opportunity to play into this. And again, we were conservative in our projections because we don't know exactly how long it takes to be able to get some traction around it. So we're being conservative in our approach, but we do believe it's real, and we do believe there's an opportunity here that we can take advantage of.

Got it. That's helpful. And then a follow-up on like the Term Life margin outlook. I think Tracy mentioned 21% is the guide for this year. I think it's a little bit below where Primerica has been running over the past few years. So just hoping you could unpack some of the moving pieces there. Is there anything around like mortality trend assumption that you're seeing? I think maybe that the DAC and insurance commission run rate is a bit higher. So just wondering about the moving pieces in the margin outlook there.

Yes. So when I look at the Term Life business, I see that it is very stable. When you look at the margin, one thing I'll definitely point out is as we see the benefit and claims ratio, the first thing I'll point out is that, that ratio is overall stable. The one item to consider is that as the insured attained age increase, obviously, the reserve aligned with it would typically go a little bit higher. But the net investment income is there to offset some of that time value of money. And our investment income is in another segment. So when you put it back into where the benefit ratio would be, the benefit ratio is actually pretty much stable. No change at all. So that's one thing to just think about is the fact that we don't marry the investment income against the benefit reserve that typically, otherwise, when combined is really a very stable piece. In terms of the DAC, that is, to a degree, a function of the growth as well. For example, the commission, last year, as Glenn has talked about earlier, we had a little bit slower growth on the recruiting, for example. So fourth quarter, our commission dollars that were not put into DAC was very light in fourth quarter. So when you start to have some growth going on and you're going to have a little bit more commissions going in is one of the things to think about. And then DAC also is a function of how fast ADP grows. And the faster the ADP grows, the higher the DAC ratio. So some of those are some of the detailed elements to it. But overall, if you put in the net investment income back, it's still relatively stable and very sustainable piece of growth because most of the premiums is really recurring. So even when we didn't have a whole lot of policy growth in the fourth quarter, we still see the ADP growing at a reasonable rate. So I hope that helps.

Our next question is from the line of Mark Hughes with Truist Securities.

Glenn, any way to judge that substitution effect you've been talking about some of these shifting demographics between the 2 groups, people getting ready for retirement, putting money in their ISP accounts. And I think you've talked in the past about how the reps kind of go where the opportunity is. And so there's a natural kind of internal shift in addition to those maybe demographic trends. Any sense of what the magnitude of that might be, again, just people spending their time on ISP rather than term life?

Yes. It's pretty hard to measure, Mark. I think you're right. I think what has momentum, what's succeeding is attractive and you see people shifting their attention in that direction. And because of the unique dynamic in our business where, as I mentioned before, one of those major segments is often strong when the other is weak is it keeps business diversified. It keeps people looking at both sides. And so we're going through a period right now where, obviously, the ISP is so strong, it's very attractive. But at the same time, I don't think that's unhealthy. I actually think it's healthy because it smooths out the ups and downs of our overall business for the company as well as for our representatives. So we are seeing a lot of interest in our ISP business. That gives us some tailwinds, although that licensing process is much different than life and much more difficult than life. We are seeing more people stepping up to get their license. We're seeing more productivity of those with licenses, as you would expect with that kind of success. At the same time, that's probably -- that is a more experienced group of our sales force. And so you really enter the investment business generally after a few years with us. And then as you age and your peer group gets closer to retirement, you tend to service more of them and over time, move that direction. But still, we're attracting a tremendous number of young entrepreneurs of the future to our business, and they really drive the other side of our business that's generally a little bit younger as well as earlier in their evolution as a financial family on their journey. Those that are younger and establishing families generally money is a little bit tighter. So they're more likely on the protection side. So it's a very natural move. It's something we've seen over our 50 years serve us well. We do always remind our sales force of the business that you're not focusing on right now is still an important business. And that's part of the opportunity we have is depend on swings back toward life insurance is to pick up some momentum there, which we think it will over time. So -- but giving you specifics of a certain set of numbers or how the trend works is a little difficult because of the diversity and age of our sales force.

Understood. And Tracy, I'm sorry if I missed this, but did you give an expense outlook for the full year?

Yes. Our expense outlook for the full year is about 7% to 8% on a full year basis. Yes. And then first quarter, typically on a dollar basis, is a little bit higher than other quarters because of the compensation and vesting of incentives. But on a percentage basis, it's still on the lower end of that whole year guidance. Now on the expense side, one thing I will point out is because of our strong capital position and how much we expect our growth potential is still in the long run, we are making proactive organic investments. Those investments, some are highlighted by Glenn already on sales training. We are actually already actively deploying very modern technology to enhance a lot of the areas. And we also are further investing in our technology so that we can really help support the productivity for our home office to handle the growth. Think about how much we have grown in securities business. We basically doubled that business in 2, 3 years, and the volume has exploded. So we continue to invest in our infrastructure, our ability to handle our clients with the best service levels and also investing in our -- also support for our clients on policy handling, claims, handling their transactions on security side. We expanded our securities product to more than 50 some new products on managed account, and we obviously moved to a new platform a few years ago. So all of those are investments we're making. So for 2026, we continue to make those investments so that we can support that tremendous growth we continue to expect securities over the long run and then our growth in terms which we do think when we turn 50, there will be even more momentum that we would be expecting. So we are investing in our business that drives some of that expense growth.

The next question is from the line of Suneet Kamath with Jefferies.

Glenn, I wanted to first ask about your money in motion comment, which I happen to agree with. But I think there's 2 things that sort of could become headwinds for what you're describing. And so I just want to pick your brain on them. The first is that a lot of 401(k) companies are now rolling out wealth management businesses to presumably offer to clients the same solutions that your folks do. And then second, and this is probably more of a longer-term risk in my view. But if we do get a lot more usage of in-plan guarantees automatically in the 401(k) plans, is that something that could negatively impact your sales outlook?

Thanks, Suneet. That's a great question. I do think that every company in this space is looking how to take advantage of the opportunities that are emerging and that flight to guarantees or that movement to guarantees, I'm not sure it's flight, as people age is an obvious one. And I do think the 401(k) providers are going to try to do what they can to preserve their business. But the other side of that, again, it's a little bit like the AI question. The advantage that we have is that we have deep relationships with our clients, personalized service, often at the kitchen table or across the desk in the Primerica office face-to-face. And what we see is that's a more powerful lever than the 401(k) provider sending an e-mail and saying, if you've got questions or even calling and saying we now have wealth management, there's just not that natural relationship there. And so the relationship and the personalized service and the motivation that one human provides to another is really our advantage. And I don't think that changes with 401(k) providers trying to step into that gap because that's what they're doing. They're seeing why the money is moving out of 401(k)s, okay? And it is because people want a broader wealth management view or the guarantees they can get elsewhere that are not. And so they're going to try to stand in that gap. But I don't think that's going to make a huge negative impact. It will be part of a series of headwinds and tailwinds that we'll manage. But I think the way we overcome is with our relationships, our personalized advice, it served us well, and it continues to overcome all those innovations we see in the marketplace. So we think we can compete on that front and overcome that should it arise.

Okay. That's helpful. And then the second one, maybe going the other way is we're hearing from the annuity writers that there's a lot more competition. And I would think if the -- if that continues to develop, it would presumably put the ball more in the court of the distributors like yourselves. And so I'm just wondering, is that an opportunity for you if there is more competition? Do commissions typically change? And could that benefit your financial results at ISP?

Yes, I do agree that the competition makes for better product sets. And as we've said before, we keep a fairly narrow shelf of a handful of providers. We don't try to have a distribution relationship with every provider out there. But as innovations are created by companies that we don't represent, they're often adopted by companies that we do represent because we believe we represent the best of the best. And they've done an excellent job in improving their products over the recent years. So I think absolutely, as that becomes an even bigger part of the overall wealth management business, then companies are going to continue to step up and provide better products. Usually, we see that in terms of better value for the consumer. The compensation often doesn't change radically. There's a pretty tight band of compensation among products, a lot of supervision and regulation around that. So I don't think that you're going to see an annuity company suddenly come out with significantly higher compensation going to attract everybody over there. I think what they'll do is pass those improvements through on client value and clients will get better guarantees, better flexibility in the products and so forth. That's where I would expect to see it.

The next questions are from the line of John Barnidge with Piper Sandler.

You talked about cost of living pressures improving, which is fantastic to see. And then I think you talked about encouragement with January's performance. I know there were some tough comparables. But was the growth rate in January greater than the '26 guidance assumes across ISP and Term Life?

Yes. I don't think we're ready to put that out until we get to our quarterly assessment because there's a lot of ways of measuring that. And so it was an encouraging January, and we continue to see momentum, particularly in the ISP business continue to be strong. But I think we'll give you the detail around that at the first quarter report.

And then maybe on free cash flow conversion, and I get you put out the $475 million, but earnings have been emerging quite strong in the last several quarters. And there's some dislocation in the stock. Do you ever opportunistically consider increasing the level of free cash flow conversion during those times?

Yes. John, I think on the cash conversion front, we have a very consistent performance in terms of converting our cash in a pretty narrow band. And historically, we've converted in recent past about 80 some -- around 80%. And so we typically obviously make decisions looking at multiple years out. Obviously, the Board is going to be actively involved in any decision to make any changes. But we are confident, John, that we provide superior on the high end of the conversion and return when we look at in the peer group. So I think we're going to focus on continued strong consistent performance, obviously, any change with the Board's involvement.

The next question is a follow-up from the line of Joel Hurwitz with Dowling & Partners.

Tracy, sort of following up on John's question there on capital. Last quarter, you talked about having plans to draw down excess capital from the life subs. It looked like that may have occurred in the quarter. Can you just elaborate on what you did there? And I guess, the expected uses of that capital, right? I think you said your holdco liquidity is now over $500 million as of year-end.

Yes, you're absolutely right. We have been actively managing our cash conversion. So for 2025, we had a certainly a good amount of planning and activity. We were given indication in the third quarter release that we may be stepping up on the conversion from the life side of the companies, and we were able to arrange a loan between our PLIC, our key U.S. life company with a holdco. So we were able to have some excess conversion coming out that helped the holdco cash amount. And as I mentioned, we continue to step up our return to our stockholders, and we stepped up our buyback from $450 million to $475 million, and that's certainly a need to continue to support that. And then we also increased our dividend by 15% on the dividend payout that's coming out that we just announced. So all of those are part of the reason. And more importantly, we're also going to continue to support our organic growth as we have mentioned just previously earlier. So the -- all of this management is to make sure that we have a high conversion and contribution to our continued confidence in our business and organic investment for the long-term growth.

This now concludes our question-and-answer session and will also conclude today's conference. Thank you for your participation. You may now disconnect, and have a wonderful day.