Primerica (PRI)

Financial services company Primerica (NYSE:PRI) announced better-than-expected revenue in Q4 CY2025, with sales up 8% year on year to $853.7 million. Its non-GAAP profit of $6.13 per share was 8% above analysts’ consensus estimates.

Company Overview

With a sales force of over 140,000 licensed representatives operating on an independent contractor model, Primerica (NYSE:PRI) provides term life insurance, investment products, and other financial services to middle-income households in the United States and Canada.

Life insurance companies collect premiums from policyholders in exchange for providing a future death benefit or retirement income stream. Interest rates matter for the sector (and make it cyclical), with higher rates allowing insurers to reinvest their fixed-income portfolios at more attractive yields and vice versa. Additionally, favorable demographic shifts, such as an aging population, are driving strong demand for retirement products while AI and data analytics offer significant opportunities to improve underwriting accuracy and operational efficiency. Conversely, the industry faces headwinds from persistent competition from agile insurtechs that threaten traditional distribution models.

Primerica competes with traditional life insurance companies like Northwestern Mutual and New York Life, discount brokerages such as Charles Schwab (NYSE:SCHW) and Fidelity, and other financial services firms targeting middle-income consumers including Edward Jones and Ameriprise Financial (NYSE:AMP).

Insurance companies generate revenue three ways. The first is the core insurance business itself, represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected but not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from policy administration, annuities, and other value-added services. Luckily, Primerica’s revenue grew at a decent 8.2% compounded annual growth rate over the last five years. Its growth was slightly above the average insurance company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Primerica’s annualized revenue growth of 8% over the last two years aligns with its five-year trend, suggesting its demand was stable. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Primerica reported year-on-year revenue growth of 8%, and its $853.7 million of revenue exceeded Wall Street’s estimates by 0.8%.

Net premiums earned made up 56.7% of the company’s total revenue during the last five years, meaning Primerica’s growth drivers strike a balance between insurance and non-insurance activities.

Markets consistently prioritize net premiums earned growth over investment and fee income, recognizing its superior quality as a core indicator of the company’s underwriting success and market penetration.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

Primerica’s net premiums earned has grown at a 6.1% annualized rate over the last five years, slightly worse than the broader insurance industry and slower than its total revenue.

When analyzing Primerica’s net premiums earned over the last two years, we can see that growth decelerated to 3.6% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. While these additional streams certainly contribute to the bottom line, their impact can vary. Some firms have shown greater success and long-term consistency in investing their float compared to peers. However, sharp fluctuations in the fixed income and equity markets can significantly affect short-term performance.

This quarter, Primerica’s net premiums earned was $445.9 million, up 1.3% year on year. But this wasn’t enough juice to meet Wall Street Consensus estimates.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Primerica’s EPS grew at a remarkable 18.7% compounded annual growth rate over the last five years, higher than its 8.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Primerica’s earnings can give us a better understanding of its performance. As we mentioned earlier, Primerica’s pre-tax profit margin expanded by 6.8 percentage points over the last five years. On top of that, its share count shrank by 19%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Primerica, its two-year annual EPS growth of 19.7% is similar to its five-year trend, implying stable earnings.

In Q4, Primerica reported adjusted EPS of $6.13, up from $5.03 in the same quarter last year. This print beat analysts’ estimates by 8%. Over the next 12 months, Wall Street expects Primerica’s full-year EPS of $22.94 to grow 3.5%.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Primerica currently has $595.3 million of debt and $2.45 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.3×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on equity, or ROE, represents the ultimate measure of an insurer's effectiveness, quantifying how well it transforms shareholder investments into profits. Over the long term, insurance companies with robust ROE metrics typically deliver superior shareholder returns through a balanced approach to capital management.

Over the last five years, Primerica has averaged an ROE of 27.7%, exceptional for a company operating in a sector where the average shakes out around 12.5% and those putting up 20%+ are greatly admired. This shows Primerica has a strong competitive moat.

It was good to see Primerica narrowly top analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its net premiums earned missed. Overall, this was a weaker quarter. The stock traded up 1.9% to $258.23 immediately following the results.

Updated: February 11, 2026 at 11:43 PM EST

Before making an investment decision, investors should account for Primerica’s business fundamentals and valuation in addition to what happened in the latest quarter.

There are a lot of things to like about Primerica. First off, its revenue growth was decent over the last five years. And while its projected EPS for the next year is lacking, its stellar ROE suggests it has been a well-run company historically. On top of that, its expanding pre-tax profit margin shows the business has become more efficient.

Primerica’s P/B ratio based on the next 12 months is 3.2x. This valuation tells us it’s a bit of a market darling with a lot of good news priced in. Add this one to your watchlist and come back to it later.

Wall Street analysts have a consensus one-year price target of $298.50 on the company (compared to the current share price of $259.98).