Welcome to today's Primerica Q4 Earnings Results Conference Call and Webcast. My name is Nate, and I will be the moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. I would like to now pass the conference over to Nicole Russell with Primerica. Nicole, your line is open. You can go ahead. Thank you, Nate, and good morning, everyone. Welcome to Primerica's Q4 Earnings Call. A copy of our earnings press release, along with materials that are relevant to today's call, are posted on the investor relations section of our website. Joining our call today are Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Alison Rand. Glenn and Alison will deliver prepared remarks, and then we will open the call up for questions. During our call, some of our comments may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. The company assumes no obligation to update these statements to reflect new information. We refer you to our most recent Form 10-K, as modified by subsequent Forms 10-Q, and the press release filed with our Form 8-K, dated July 1st, 2021, for a list of risks and uncertainties that could impact actual results. We will also reference certain non-GAAP measures, which we believe will provide additional insight into the company's operations. Reconciliations of non-GAAP measures to their respective GAAP numbers are included at the end of our press release and are available on our investor relations website. I would now like to turn the call over to Glenn. Thank you, Nicole, and thanks everyone for joining us today. Q4 and full year results continue to reflect the strong demand for our financial solutions and the resilience of our business model despite the uncertainties caused by the pandemic. Adjusted operating revenues increased 22% compared to both the last year's Q4 and full year 2020 results. Diluted adjusted operating income per share increased 20% quarter-over-quarter and on a full year-over-year basis. Q4 investment product sales remained well above our prior year period levels, while sales in the Term Life business continued to normalize as expected. In our Senior Health business, results from our first annual election period were weaker than expected due to a combination of lower sales volume and higher contract acquisition costs. We incurred a preliminary non-cash impairment charge of $76 million during the Q4. Continued elevated policy churn in the Senior Health market was a significant driver, along with other factors such as e-TeleQuote's recent financial performance and the decline in market values of publicly traded peers. Alison will address this impairment and our financial outlook for Senior Health in her prepared remarks, and I will expand on our plans to address e-TeleQuote's operational challenges in a moment. Taking a closer look at how the pandemic has impacted our distribution results on slide four, after nearly two years of COVID disruptions, our sales force has adapted extremely well to new ways of conducting business. Recruiting remains strong, buoyed by greater utilization of web conferencing technology, and more recently, the Great Resignation that has created a record number of individuals looking for alternative career paths. The licensing process remained constrained by many of the challenges we discussed in the past, including various limitations from state and provincial social distancing measures and individual comfort level when it comes to congregating in larger groups. Initially, we were encouraged when restrictions began to ease. However, our progress was again delayed with the re-emergence of a new COVID variant. We believe it could take several more quarters before the licensing process returns to its pre-pandemic levels and suspect that our licensing results will remain under pressure through the first half of 2022, before gradually improving later in the year. Despite licensing headwinds, we ended the year with around 129,500 life license representatives versus 130,500 at the start of the pandemic. This is particularly noteworthy considering the numerous challenges we had to navigate during the pandemic. We continue to see significant opportunities to increase the size of our sales force as demand for our products and services continues to outpace our reach, and competition for middle-income consumers remains relatively low. In addition, our entrepreneurial opportunity is very attractive in the current environment, as demonstrated by strong recruiting numbers. Our success in growing the sales force from here will depend on continued strong recruiting and adjusted licensing efforts through increased focused leadership, more effective communication, and licensing incentives. Beyond the licensing process challenges posed by the pandemic, some improvements are needed to make test preparation more convenient and effective. While the process requires constant adjustment to remain effective, these changes are within our control and remain the building blocks of success. We expect long-term growth in the size of our sales force to be in the low to mid-single digit range, although it will not be linear from year to year. In the near term, we anticipate growing the sales force around 2% in 2022. Turning next to slide five. As anticipated, term Life Insurance sales volume continued to normalize following a period of heightened fear and urgency that was created by the pandemic. We continue to see strong, sustained demand for protection products with sales volumes in each quarter of 2021 above the pre-pandemic baseline level for their respective periods. We ended the year with over $900 billion of face amount in force, which represents a year-over-year increase of 5% and positions Primerica as one of the top issuers of individual term Life Insurance in North America. Looking forward to the future, we believe we can continue to build on the momentum that started mid-year 2019. Based on our current outlook, we expect full year 2022 Term Life sales to increase slightly over 2021's near record levels, with first half results trailing the 2021 period and the second half of the year increasing versus the prior year period. Slide six summarizes results from our Investment and Savings Products segment. We ended the year on strong footing with quarterly sales once again exceeding $3 billion and full year sales at nearly 50% versus last year's record-setting pace. Net flows remained at record levels throughout the year, and when combined with favorable equity market appreciation, led ending client asset values to a nearly 20% increase and a record-setting $97 billion at year-end. Our opportunity in the ISP business remains very attractive, with more than 26,000 reps currently licensed to sell mutual funds. Given current levels of market volatility and uncertain economic conditions, we are projecting a more modest single-digit growth rate for investment product sales in 2022 versus 2021's record-breaking year. Included in this assumption are changes to the commission model in Canada that go into effect on June 1st, which will require us to discontinue the use of mutual funds with a deferred sales charge compensation model, which is the primary model we currently use in Canada. We have plans to address this change, but it could create short-term disruptions in Canada as the field familiarizes itself with a new series of funds that will be sold exclusively by Primerica mutual fund licensed agents and with the new compensation model. Canadian mutual funds currently represent approximately 13% of total investment in saving product sales. While there are many unknown factors that could derail investor confidence, our education-based approach helps focus investors on their long-term goals. Our licensed representatives continue to play an important role in keeping clients invested for the future. Turning next to the Senior Health market and our recent acquisition of e-TeleQuote on slide seven. So far, Senior Health has underperformed expectations. This has been driven by a number of factors impacting the sector generally, and e-TeleQuote specifically, including increased policy churn, which has reduced expected lifetime revenues, lower overall sales volume, and contract acquisition costs above anticipated levels. Starting with churn, while the reasons for churn are challenging to pinpoint, we believe this trend is driven in part by increased consumer awareness of the advantages of shopping for plans regularly and broader competition within the space. We monitor churn by carrier, and it stops selling carrier plans in certain geographies or altogether if their levels of churn remain outliers to other carriers. We are also evaluating other approaches to improve policy retention, such as client affinity campaigns and predictive lapsation algorithms. Next, addressing sales volume. Just prior to the annual election period or AEP, CMS imposed a regulatory change in its marketing material review process, which led to a slower start to AEP. Additionally, as I mentioned last quarter, we entered AEP below desired staffing levels. Historically, the starting agent count remains largely intact through AEP, as agents typically do not attrite voluntarily, given the selling opportunity. However, agent attrition in the Q4 was substantially higher than in past years. We believe this is a result of tight labor markets and employees from many sectors stepping away from traditional work. On a related labor and agent point, we have continued to see a fall off in productivity with our agents operating in a work- from- home environment. We continue to work to address ways to improve productivity, including a revised recruiting approach, formalized long-term hybrid work arrangements, compensation adjustments, and other strategies. Finally, with respect to contract acquisition costs, the labor issues I just described contributed to contract acquisition costs being higher than expected. Additionally, while we actively manage lead sources and mix, some sources proved less attractive than anticipated. We are adjusting our Senior Health business going forward to address the challenges that we and the industry as a whole are facing. Areas of investment include the continued build-out of the management team and growing a robust data science practice to better identify the best leads and route them to agents with the highest probability of closing. In 2022, our focus will be on addressing the fundamental issues I've just outlined and growing the business responsibly. As we tackle necessary changes, we will build our agent count and sales volume more slowly than originally planned. While the challenges are bigger than anticipated, the strategic rationale for acquiring e-TeleQuote remains unchanged, and the growth characteristics in the Senior Health market continue to exist. Offering Senior Health products allows us to provide an important service to the growing middle market senior population that can further strengthen their relationship with Primerica. The additional product line expands the income opportunity for our sales force and can facilitate sales of our core products. Over the long term, we expect the company and our stockholders to benefit from this acquisition. Early indications are that leads sourced by Primerica reps have an advantage due to the existing relationship between the rep and the client. We believe this is a competitive advantage within the space. We remain committed to e-TeleQuote and the Senior Health market. Now I'll turn it over to Alison. Thank you, Glenn, and good morning, everyone. I will start on slide eight by continuing the discussion on Senior Health, focusing on recent financial results, the goodwill impairment charge, and our outlook for the segment. I will then review financial results for our other segments, highlighting some key factors impacting our 2022 outlook. I'll conclude with a discussion of operating expenses and capital and liquidity. e-TeleQuote, along with other Senior Health distributors, has experienced elevated policy churn from carrier product changes and heightened competition, which, when combined with recent financial performance and the declining market values of publicly traded peers, triggered the need to review goodwill for possible impairment. The analysis entails creating new financial projections and updating cash flows for the business, as well as an assessment of peer company market-based indicators. The derived fair market value was compared to the carrying value of the Senior Health segment, which includes the $515 million purchase consideration at the time of acquisition, plus results of operations thereafter. Note that the $515 million reflects 100% of e-TeleQuote, including the 20% stake not currently owned by Primerica, as valued using the formulaic price in the purchase contract. As a result of our analysis, we recorded a goodwill impairment charge of $76 million in the Q4, which is preliminary and subject to change until we file our Form 10-K on or before March 1st. The company excludes the goodwill impairment from operating results as it represents a non-recurring item that causes incomparability of the company's core results from period to period. A critical component of our cash flow projections and approach to revenue recognition for our Senior Health business is the expected persistency curve for policy cohorts. Since the closing of the e-TeleQuote acquisition on July 1st, 2021, we have been building a new algorithmic model that uses real-time trends in cash collections on the in-force book of policies to predict lifetime commissions for newly approved policies and updates expected collections of renewal commissions for policies approved in previous periods. The model incorporates our accounting policies for calculating renewal commissions under the expected value approach, which in some cases differ from those historically used by e-TeleQuote. To conform e-TeleQuote's accounting policies to ours, we adjusted their preliminary allocation of the purchase consideration by lowering the renewal commission receivable as of July 1st, 2021 by $46 million to reflect persistency experience as of the acquisition date. We made other changes to the purchase consideration allocation during the quarter that resulted in a revised goodwill balance of $255 million as of the date of acquisition. The allocation continues to be preliminary and subject to change until the end of the measurement period on July 1st, 2022. The goodwill balance as of year-end of $179 million is the $255 million net of the $76 million impairment we just discussed. The new revenue recognition model was used to determine the expected lifetime value of commissions, or LTV, of $1,069 for policies approved during the Q4. It was also used to update expectations for renewal commissions receivable on policies approved in previous periods based on changes in persistency estimates since the acquisition date. The result was a $5 million negative tail adjustment from continued shortfalls in cash collections in recent periods. Further to Glenn's earlier remarks, we plan to thoughtfully manage growth in Senior Health while we adjust how the business is managed to address the challenges that we and the industry as a whole are facing. We expect operating income before income taxes for the segment to be negligible, including some continued deterioration in cash collections versus aggregate historical trends in 2022. The negative cash flow for the segment has been greatly reduced and is expected to be about $10 million-$15 million for 2022, including the cash tax benefit of NOL carryforwards that were acquired with the business. Under our current plans, which may change based on our success in addressing challenges in the business, we expect negative cash flow from the Senior Health segment to be less than $75 million in the aggregate before turning positive likely in 2027. While near-term results are nominal, we continue to believe there is real opportunity for Senior Health to be a strong contributor to earnings in future years. Turning now to slide nine, showing our Term Life segment. Operating revenues of $409 million grew 11% year-over-year, driven by a 12% increase in adjusted direct premiums. Growth in premiums continued to benefit from the compounding of nearly two years of strong sales and better policy persistency driven by COVID. Combined, these added $13 million to pretax income, compared to $7 million in last year's Q4. The operating pretax margin, which is generally lower in the Q4 due to normal seasonal patterns, was 18.6%, up slightly from last year's 18.2%. COVID continues to adversely impact benefits and claims. The Q4 of 2021 included an estimated $17 million in COVID-related net death claims, up from $14 million in last year's Q4. The rate of COVID mortality in our insured population remained in line with the rate observed during the Q3 at around $14 million per 100,000 deaths in the U.S. and Canada. Current period results also included around $2 million in excess net death claims that were not specifically identified as COVID, but may be indirectly linked due to the delay of medical care or the increased incidence of behavioral health issues. We expect this level of quarterly excess death claims to continue in 2022. Although total excess net death claims increased $5 million over the prior year quarter, the benefits and claims ratio declined by 130 basis points. The primary reason is the annual locking in of assumptions for new business, which typically takes place during the Q4. This year's process had a negligible impact on current period results, whereas in the prior year period, a reduction to the long-term interest rate for new business resulted in a $5.5 million increase in benefit reserves. Persistency remains strong, with aggregate lapses around 20% below the pre-pandemic baseline and early duration lapses around 10% below the baseline. Quarterly pre-tax income continues to benefit from elevated persistency, with DAC amortization lower by $11 million and reserves higher by $7 million for a net positive $4 million impact versus the pre-COVID baseline. The corresponding net benefit was $10 million in the prior year period when lapses were at unsustainable record lows. As we look ahead to 2022, we expect modest growth in Term Life sales, as Glenn discussed earlier, and lapses to normalize at an aggregate level approximately 10% better than the pre-pandemic baseline. Considering these factors, we expect year-over-year adjusted direct premium growth, which slowed in 2021 from 16% in Q1 to 12% in Q4, to be around 9% on a full year basis in 2022. Based on published projections for COVID deaths and the anticipation of no new deadly strains emerging, we expect COVID-related net death claims to be around $20 million in 2022, largely occurring in the first half of the year. We anticipate the recent trend of excess non-COVID claims to continue at around $2 million per quarter throughout 2022. Considering these combined factors, we expect the full year 2022 pretax operating margin to be largely consistent with that experienced in 2021. We continue to work through the intricacies of implementing targeted improvements to the accounting for long duration contracts, or LDTI, which goes into effect next year. The new guidance changes the way in which both benefit reserve changes and DAC amortization are recognized through earnings. It requires the remeasurement of reserves no less than annually and modifies the way experience variances and changes in assumptions for the entire in-force are recognized through earnings. It also requires DAC to be amortized on a constant level basis over the expected term of the related contract versus the level percentage premium approach used today. We plan to adopt the new guidance on a modified retrospective basis with reserves and DAC adjusted prospectively beginning January 1st, 2021. We are finalizing our accounting policies under LDTI and developing and testing the many actuarial assumptions and models needed for implementation. We expect to provide quantitative information on the impact to prospective earnings when we report Q2 results. The guidance also requires that the discount rate for measuring reserves be updated at each reporting period using an upper median grade fixed instrument yield, with resulting reserve changes reflected through equity in accumulated other comprehensive income. Under the current guidance, the discount rate is locked in at issue and is based on the expected yield of the invested assets that support the reserve. Given the weighted average age of our reserve liabilities, the average locked-in discount rate is about 5.25%. Remeasuring reserves using the discount rate methodology required under LDTI in today's rate environment will result in a significant change to accumulated other comprehensive income as of the date of adoption. It will also introduce volatility in AOCI as investment yield environments change over time. We plan to remove the impact on AOCI from operating results where applicable, and plan to provide quantitative details when we announce Q2 results. As a reminder, this new standard modifies the timing of profit emergence under GAAP, but does not impact the economics of the business, nor does it change the company's cash flow or statutory capital requirements. It will not change our ability to distribute capital from Primerica Life or our ability to deploy capital at the holding company level. Turning now to our Investment and Savings Product segment on slide 10, operating revenues of $247 million increased 28%, while pretax income of $71 million increased 25%. Sales and asset-based revenues increased in line with growth in revenue-generating product sales and average client asset values, respectively. Sales-based commission expenses increased faster than sales-based revenues as we recorded a $4 million true-up of field bonuses during the quarter to reflect the outstanding performance during 2021. Asset-based commission expenses grew in line with the related revenues. As Glenn noted, we are assuming that ISP sales and market appreciation will return to more traditional levels, growth levels in the mid-single digits for 2022. Operating margins for the segment are expected to remain stable. In our Corporate and Other Distributed Product segment, our adjusted operating loss of $22.3 million increased $4.2 million year-over-year. The increase is largely due to $3.6 million lower allocated net investment income from lower portfolio yields and a higher allocation of NII to the Term Life segment in support of the growing block of business. We also incurred higher interest expense of approximately $1 million prior to the extinguishment of our 2012 notes. Offsetting these items was $2.9 million lower benefits and claims due to a reserve adjustment on a closed block of business in the prior year period. On slide 11, consolidated insurance and operating expenses for the Q4 were largely in line with our expectations. Looking ahead to 2022, we expect insurance and other operating expenses to increase by about $80 million or 16%. About a quarter of the increase, or $20 million, reflects a full year of Senior Health segment expenses versus six months in 2021. Of the remaining $60 million, we expect approximately 50% to be incurred in Term Life, with the remainder split about evenly between ISP and Corporate and other. The 12% year-over-year growth in our core business is driven by various factors, including growth in premiums, average client asset values and other business metrics, increased staffing costs from annual employee benefits and merit increases, service level improvements, and higher instructor salaries for more in-person licensing classes, and continued investment in technology to modernize platforms, enhance initiatives such as the mortgage program and our CRM system, and accelerate our speed to market. Also note that the delay in the convention from 2021 to 2022. We are incurring the cost of two field leadership trips and the convention this year, when in a typical year, only two of the three would be incurred. Finally, on slide 12, liquidity at the holding company remains very strong, with invested assets and cash of $295 million. Primerica Life's statutory risk-based capital ratio is estimated to be 440% at year-end, and we anticipate maintaining the RBC ratio at around 420% in 2022. The performance of our Term Life and ISP businesses continue to drive strong levels of deployable capital, and as a result, the board of directors has increased the previously announced share repurchase authorization of $275 million by $50 million. Approximately $20 million was completed in 2021, and the remaining $305 million is expected to be completed this year. With that, I will turn the call over to the operator for questions. Absolutely. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason, excuse me, you would like to remove that question, please press star followed by two. Again, to ask a question, please press star one. If you are streaming today's call, please dial in and enter star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We'll pause here briefly as questions are registered. Our first question goes to Andrew Kligerman with Credit Suisse. Andrew, your line is open. You can go ahead. Hey, good morning. Um? Good morning. Glenn, could you remind me again of what you expect recruiting to be up this year? You had mentioned a bunch of numbers, and I wanted to make sure I got that. Yeah, we expect recruiting to be up slightly this year, Andrew. We have used a lot of special incentives over the last couple of years, and we're trying to wean ourselves off of those. That puts a little pressure on it. You do get a little less committed recruit when generally they've been enticed with a special incentive. There's a pro and a con to each approach. We do believe we're going to be up slightly this year overall over 2021 full year. I see. I guess, as I think about the recruiting and, you know, you've had periods of great effectiveness, but is there any change, anything different going on that may, you know, maybe we could think out to 2023 that you'll get a move, a big move in recruits? Like, what's potentially going to change in that strategy that might get us really excited about growth in the maybe intermediate term then? Yeah, well, I think you've got to look beyond just the top line recruiting number, Andrew, because that's a number that's, as I said, easily influenced by the things that we do, but it's only a piece of us growing our sales force. We're very pleased with the level of recruiting. We do think we're getting a tailwind from the Great Resignation, as I mentioned in my opening remarks, in that people on the move between careers are often interested in taking a look and maybe even taking a try at building a Primerica business. As we've said throughout the pandemic, the challenge is what's happened in the change in the pull-through with licensing because those recruits have got to simultaneously be field trained and be licensed, among other things. As we move to a remote licensing process during the pandemic, which was the only option during the pandemic, you know, we immediately recognized that it's a great study of effectiveness versus efficiency. You know, it's more convenient to do an online program. It's more flexible. More people sign up, but we find that fewer people complete. You've got the benefit of more recruits signing up and beginning the process, but you've got the negative to manage of fewer people completing. The reason they fail to complete is because there's not as much accountability, not as much discipline, and not as much visibility. When you see people coming to class, you know where they are, you know how to encourage them, you know how to hold them accountable. That's what we're working through now as the states and provinces kind of normalize our ability to be able to do either of those programs, what's the best of both worlds. I believe the answer to your question is more in that how successful are we at improving the pull-through in our licensing process than it is simply driving top-line recruiting as we look out a couple of years. I see. That's very helpful. Then just maybe shifting over to Senior Health. You know, Alison cited, I think it was $75 million in negative cash flow in 2022, and then turning slightly positive in 2023. You know, I guess it's, you know, moving out to 20- Excuse me, Andrew. Andrew, before you keep going, I do need to correct you. The $75 million was actually the aggregate negative cash flow that we expect prior to turning positive, likely around 2027. The negative cash flow for 2022 specifically is probably in the $10 million-$15 million range. Okay, good. Good correction. Thank you. Okay, that's good to hear. So as we look out to 2023, what gives you confidence that you can get earnings back on track, cash flow to a positive number? What are the potential signs that are giving you any confidence that this business is attractive? Well, we like the opportunity, Andrew, in the space, and particularly the alignment it has with Primerica. That was our whole strategic analysis over multiple years and looking at all types of potential additional products to use the strength of our distribution to get into the marketplace. Of course, we chose to the mortgage business that we talked about, that's a partnership, and then the acquisition in the Senior Health space. We continue to believe that the growth in that space, the need for the product, once again, of some similarities to the Life Insurance business where maybe the middle market is not getting all the attention it could, kind of the things that are in our sweet spot within our other businesses, we also see true in this business. It's clearly a business that's gone through significant transition in the last year or so, and that's what we're adapting to. We do believe that, you know, we're a company that's good at the blocking and tackling of business, and we believe we can adjust to those fundamental changes, and then we can apply the synergies of our two organizations to give us an edge in the marketplace over the similar models. We believe with, you know, with a couple of years of hard work, we're going to get this to the right place. Okay. Thank you. Thank you, Andrew. Our next question goes to Ryan Krueger with KBW. Ryan, your line is open. You can go ahead. Good morning, Ryan. Hi. Thanks. Good morning. I guess the amount of free cash flow drag from Senior Health in your projections has changed quite a bit. I was hoping to understand the key drivers a little bit more. I guess is a lot of it that your growth expectations have declined, and so that will consume less of cash? Or could you just provide a little bit more detail on some of the key changes? Sure. You definitely hit the main one. I've mentioned this before, just like Life Insurance, you know, if you look at Life Insurance on a statutory basis, putting a new piece of business on the books is very negative from a cash flow perspective. There's a lot of upfront costs, and the money comes in over time. The unique thing about this business is you get to recognize all those revenues under the accounting rules, unlike insurance, where it's more matched, and the revenues come in as you recognize the expense by deferring them. A big piece of this was really saying, and again, I don't want to say it was purely driven by cash flow. It was driven by a confluence of items, which is really that we want to make sure that we are putting business on the books that it has a healthy return. We're focused on the LTV to customer acquisition cost ratio and things along those lines. We're very focused. We don't want to plow through and put lots of business on the books and burn a lot of cash that we don't believe ultimately drives real value. Forget about GAAP book, you know, the GAAP value, but real economic value for the business. That's really why we're slowing this down, and that will give us the air cover and the time to address things that Glenn already mentioned, like the labor markets and just various changes that are going on with the marketplace. See, quite frankly, where churn settles out, because some of that is really outside of our control. We can do things to limit it, but it will continue to be an obstacle. We do want to make sure we're only putting, you know, quantities, large quantities of business on the books once we feel that we are in a solid economic footing with how the business is being managed. One other change I was gonna mention is that when we originally reported our cash flows, we did not include the cash benefit of net operating losses that were acquired as part of the business. We specifically did not because we had not completed our analysis on whether we'd be able to realize value from those. We have completed that, and now the numbers are net of those types of items which, you know, are, I think, the federal one is in the $22 million-ish range. The state one's in, say, the $7 million range, give or take. You've also got the net operating losses going forward on the business that we will be able to absorb and reduce our cash taxes at the PRI level. Got it. That's really helpful. I guess related to cash flow generation, how do you, when you think about the $325 million buyback authorization and the common dividend, can you help us think about to what extent this would consume some level of excess capital versus the ongoing free cash flow generated by the businesses in 2022? I think I understand your question. I think the best way I can answer it is to say that all of the share buybacks that we plan to do during 2022 will come out of capital that is generated and becomes deployable in 2022. You know, right now, I think I said we had, I'm gonna forget the number, whether it was $295 million sitting at the holding company. You know, it's not really coming out of that so much as the sources of capital that we expect to have from our key businesses, you know, from ISP and Life Insurance. I think that was your question. Yeah. No, that was. If I could just sneak in one real quick. What was the number of COVID deaths that you assumed when you were talking about $20 million of COVID claims? I think it was somewhere in the 100 and it's $4 million per 100,000, so it's 140,000-ish, give or take, I think is the number we used. Put it this way, we based it on the $14 million per 100,000 rate that we experienced in both the Q3 and the Q4. You know, we put that out there just based on what currently our source that we've currently been using, that's what they've indicated. I will very highly caveat that that assumes that there's no new deadly strains that emerge and the like, and that's what we're basing it on. On the flip of that, we're also basing sales and persistency on that same thought process. Got it. Very helpful. Thank you. Thank you, Ryan. Our next question goes to Mike Zaremski with Wolfe Research. Mike, your line is open. You can go ahead. Good morning, Mike. Hey, good morning, guys. Thanks for taking my question. Maybe first question sticking on the health operations. So, I believe there's a $50 million earn-out. Is that still relevant given the missed targets so far? The related, the remaining 20% stake that Primerica does not own, is that price predetermined, or is it negotiable based on current, you know, trailing performance and future performance? I'll take both of those. The earn-out, and I'll remind you that when we originally recorded the purchase consideration, we put nothing in the purchase consideration. No value was ascribed to the earn-out. That continues to be the case. There is no value currently ascribed to the earn-out. We do not believe based on our current projections that anything would become payable under that clause. With regard to the remaining 20%, in my prepared remarks, and it's very confusing because it's a lot of accounting. I talked more about accounting in this call than I think I ever have. The $515 million original purchase price is the full enterprise value. That includes not only what we acquired, but the fair market value at the time of the remaining 20% of the enterprise. That number, that amount is calculated based on a formulaic price that is in the purchase price, the purchase agreement itself. It is a predetermined formula that is based on performance of e-TeleQuote as well as a discount to performance of the peers. Based on all of those factors, we ascribe the value to it, which was in the $515 million I already mentioned earlier. Does that answer your question? I think so, and I appreciate the color, but I guess essentially what I'm trying to get at is there gonna be additional cash flow outlays for the remaining 20% you don't own, or are you saying you do own it? If that makes sense. We do not own it. According to the formulaic value right now, and you know, we update the fair market value of it each quarter based on market assessment and the like, the current actual value would be zero. Okay. Yeah, that makes sense. Thank you. Okay. I guess I'm moving to the Canadian. I believe it's a new mutual fund commission schedule. Maybe you can just kind of offer more color. Is this eliminating kind of a trail commission? I guess ultimately the new commission structure will. Is this industry-wide and will the sales, your sales colleagues be able to earn the same amount of compensation, all else equal under the new structure? Yeah, Mike, that's a great question. This is something that's been in the works in Canada for a number of years. We've been aware of it and working with regulators and with providers as it's kind of come closer to fruition. It's not actually elimination of trail commissions, it's elimination of one of the methods for upfront commissions. Trail commissions can continue and will continue. The Deferred Sales Charge that is charged on this model actually provides the financing for an upfront commission payment that comes from the fund provider or the fund manufacturer, but is not reflected in an upfront charge to the consumer. It's financed by the ongoing expenses of the product or a redemption fee if the client exits the account in the first number of years, usually around seven years. That's being eliminated as a product choice. That's industry-wide, not just for us. Anyone that's been selling those products is going through a change. There are other models in the marketplace that will continue and that's what we've kind of pursued as the replacement with a couple of our key providers in Canada, market providers, is to create a new product model. These will be products, as I said in my remarks, that are unique to our company and our sales force, although there could be other companies that create similar products for their distribution. It's not entirely unique to us. It doesn't have to be entirely unique to us, although as far as we know, there are not a lot of other players as far along in this process as we are. We've been working with our sales force on this change and how they could impact their cash flows and their businesses and so forth. Actually it's been a long-term process that's that we've been working on for more than a year specifically. We believe we have our sales force ready to make the change, although all of that is theory, and we would expect some disruption in a product change like this, in the months surrounding it mid-year. We just wanted to make everyone aware that, if we see some noise around our Canadian numbers just before and just after the June change, it would be to be expected. We feel good about our prospects, so we have a very strong ISP business in Canada, and we expect that to continue in the future. Got it. Just as a follow-up, is there a way to, you know, apples to oranges or, you know, if your sales colleagues sold the same amount of this new series of funds versus the existing, is the compensation amount similar or a little lower, a little higher, or they're not comparable? Yeah, it's similar. The timing is what happens. The previous model, the DSC model, provided upfront compensation that was financed over a long period of time through the mechanisms I described earlier. We will be looking at ways to create advanced commissions. Basically, it's a similar commission overall commission model, but there could be some timing differences. Which by the way is not terribly different from the evolution of products we've seen over the last decade or so in the U.S., as more and more of the compensation to distribution has been asset-based rather than sales-based. It's a similar direction. That gives us a little bit of some insight into how the change might take place, because we've experienced some of that shift in the U.S. in the previous years. Very helpful. Thank you. Certainly. Thank you, Mike. Our next question goes to Mark Hughes with Truist. Mark, your line is open. You can go ahead. Good morning, Mark. Thanks. Good morning. Good morning. Alison, did I hear you say that the earnings from Senior Health this year ought to be negligible? If that's the case, could you give us some sense of the kind of quarterly trajectory of earnings? I think Q1 was kind of, not the seasonally strongest, but was expected to be profitable. Then anything on approved policy counts would be helpful as well. Yeah. At this point, we're not providing any forward information on approved policies. From a quarterly perspective, you know, the way we're looking at this is we do think the beginning or our goal, I should say, is a lot of the improvements in areas of focus that Glenn had mentioned are things we're looking to tackle early on in the year with the hope that by the time we get to AEP, you know, we've at least taken some of them off the table and can produce sort of stronger results in the Q4. I would generally say the Q4 will be the highest. The Q1 would theoretically, because we're trying new things, because this is a new business for us, that where it would be typically where you ramp up agents at a specific time, we're gonna use a very different approach this year. It's a little harder to predict. The other thing that becomes unknown is, when tail adjustments may or may not hit, and so it's going to be a little bit lumpy. I can't give you the exact numbers for each quarter per se. Net-net, we do expect, I'd say most of the earnings to come in the Q4 like they would typically, and to see some losses or neutral numbers earlier on in the year. The full year is kind of flat, negligible, as you say. Yes. The tail adjustment, the $5 million that flowed through Senior Health in 4Q, I assume, you know, but for that, earnings would have been $5 million higher. Is that the right way to think about it? That is correct. Those tail adjustments do get reflected. Any time we see that current persistency or collection trends indicate that there's been a deterioration from what we assumed in our current renewal receivable, we have to adjust it up or down for that matter. It was a downward adjustment in this case. Yeah. How much impact did your sales force make at e-TeleQuote? I think you said you have reason to believe the churn is better, the longevity of those policies is better. Did your sales force make much of a contribution in terms of the sale this quarter? Yes. [crosstalk] Here I'm talking about your legacy Primerica sales force. Yeah, absolutely. With the referral program, that is, you know, it is unique to the model and one of the things that we are feeling excited about in thinking about this venture. Yes, our sales force. First of all, I would say we had a very good reception from the sales force to the concept, understanding the need in the marketplace and the gap that this product fills and the income opportunity it creates when they, you know, do their piece of the process, which is a referral and not a sale, of course. We actually kind of rushed it to market because we recognized that the AEP period is the prime period. The good news is we were able to get out there and generate some activity that we felt very good about. The challenge is you can't annualize the AEP to know what your pull-through rates and your activity rates are gonna be for the non-AEP part of the year. It's a little difficult to take what we learned and apply it to the other three quarters. It's certainly helpful for the next AEP period. We had good response, good activity, made a significant contribution, and we feel like that's positioned us to take what we've learned from that and improve as we get throughout this year. Yeah. Alison, your lifetime commission, the $1,069, that's not down much from your prior expectations. Am I thinking about that properly? Yeah. The expectation we gave for the Q4, it's probably about 10% down. I think we had more like $1,170 or something along those lines. Yeah. Your point about the LDTI, the 5.25% discount rate, I think is what is suggested by the market indicators now for your book of business. What is your discount rate and what does that imply when we think about these two numbers? No, actually, that's backwards. The 5.25% is indicative of our portfolio's market rate. I shouldn't say that. Let me take that back. Not the current portfolio, it's the current liability. Remember, we set the discount rate, we lock it in whenever the business is issued. We sell very long-tailed business. Obviously, a lot of that business was put on the books many, many years ago, and those are where the liabilities are actually larger than on the newer business, which haven't built up reserves yet. The weighted average rate, discount rate on our reserve liability currently is 5.25%. If you use what the literature would require us to use, you know, you're talking about a discount rate today that's significantly lower than that. Given the age of your- Those are not. Yeah. Given the age of your portfolio, is there leeway in the rules for that, or do you have to change the discount rate to reflect the current new business? It's not even new business, because remember, the whole concept of looking at new business versus in-force sort of goes out the window with LDTI. It's a remeasurement, if you will, of the entire liability. No, the literature requires that you use current rates. It's got to be a medium upper grade. You know, so we're using like an A-rated fixed income security and, you know, a yield curve on that. You know, obviously, we're weighting the shorter duration liabilities with the shorter end of the curve and so forth. No, there's actually no ability to adjust that. That's one of the very interesting changes that they're making. I think one of the appropriate things that they've done, I won't go into right or wrong, but definitely appropriate, is that that change does not go through earnings, it goes through AOCI. While the balance sheet will be remeasured using the then current rate, the P&L, benefit reserve, the loss ratios will all be recognized using the locked-in rate in the reserve consistently with how we do it today. All the variability will show up in AOCI. Thank you. You're welcome. Thank you, Mark. As a reminder to ask a question, it is star one on your telephone keypad. Our next question goes to Dan Bergman with Jefferies. Dan, your line is open. You can go ahead. Good morning, Dan. Thanks. Good morning. To start, investment and savings product sales are up pretty nicely across nearly every product, not just in retail mutual funds, which I tend to think of as the most linked to equity market sentiment. Could you just give a little more color around what has driven the recent strength? How much is due to that better sentiment given strong markets versus other factors? I believe you talked about an expectation for slight growth off the record 2021 sales levels in 2022. Just given the equity market declines and volatility we've seen so far this year, you know, I guess, is there any data you can provide on how sales have trended to date? Just generally, if market conditions remain choppy, how much of a risk do you see in terms of a drop off in ISP sales? Yeah, it's a great question, Dan. Appreciate those. You know, we just got a lot of unknowns after a pretty extended period of extraordinary growth. We don't want to just straight line that growth and assume it can continue with so many uncertainties in the marketplace. You're correct that we've seen the increase very broadly across all products in both countries. It's been very, you know, system-wide within Primerica. It's not focused on a single product or a single view of the future that's driving certain product sales like can often happen. We're just seeing general interest in investing for the long term. I believe coming out of the pandemic early on, you know, we saw the first year of the pandemic drive our Life Insurance business to extraordinary records and then ease back, when our ISP business was just barely positive during the first year during 2020. That coin flipped, and we saw just the opposite as Life sales normalized in 2021, still above pre-pandemic levels, but below the previous year, and the ISP business took off. My personal view is that it's just different timing in the prioritization that the pandemic created. You know, people were protecting against premature death early on, and then are taking a little longer view of how do I get my finances in order for the longer term, in case something unexpected or when something unexpected happens in the future. That's why I think we've got the breadth. You know, our business is very long-term, retirement focused, generally, balanced to equity oriented. That's true of all of our products, generally not just mutual fund products. That's why we've seen it across the board. The challenge is exactly what you described. We just don't know what's around the corner, and we want to be deliberate and somewhat conservative in our assumptions for the next year. We saw we had a very good January in our business, including our ISP business, and saw good growth. We just expect over the year, it's most likely that growth is going to slow. For the full year, you know, we'd see something in the mid-single digits is kind of the way we're viewing it right now. That could change if there's more disruption in our very disrupted world. It could be a little better than that if things, you know, stay calm. That's just where we want to place our bets at this point and kind of proceed from there. Got it. That's really helpful color. Thanks. I guess just one more, moving to the expense side, it looked like the 12% core increase in, you know, insurance and other operating expenses that I think you mentioned in the prepared remarks seemed somewhat elevated. Should we think of that 2022 expense level as a baseline on which you'd expect to grow going forward? Or were some of the drivers of that expense increase this year more one-time in nature, whether related to some of the IT investments or convention timing that you mentioned that we might expect to drop off next year? Just any color on that would be great. Yes. It's an excellent question. The convention piece, that is a big component of the increase excluding Senior Health. It is a big chunk of what's gone up year-over-year. We just typically do not do the level of activity we're having with our field-related meetings and the like in any one given year. It's just with the pandemic, we moved the convention. It's something, you know, we cherish, we want to do. Is it optimal to do it and everything else? It's a lot of work and a lot of, you know, a time on everybody's part, but we felt it was the right decision to move it. That is one piece of the elevation that will not continue. We will not stay on that pattern. We'll go back to our normal sort of two out of three events in any given year. The other thing I would look at, I mean, technology I think will continue to be an area we focus on. I think that is one that, you know, we should expect to continue to see increases if necessary in order to grow and mature the business. The place we're seeing some unusual increases this year that should not look like increases. I think the level of expense is right, but you shouldn't see this level of growth off of 2022. It's really staffing related. I said it, I went through all this pretty quickly, but a couple of things. One is, and I'll call travel part of staffing, but you know, we haven't had a lot of our people who are field-facing, especially on the road much for two years, and we do need to get them back out on the road. That's a big part of their job and how they can, you know, help grow the business. That's a piece of it. The other thing as Glenn was talking about the in-person classes for licensing versus online, you know, we do pay the instructor salaries. We put that in staffing. We do anticipate holding a lot more in-person classes, and we think that's beneficial to our licensing pull through. Then, you know, some little things that we've seen and, you know, I assume other business have as well. We're seeing very heightened this year benefit costs, employee benefit costs, medical related. Probably a lot of that has to do with things that didn't happen in years prior, or delayed care in general. All of those are things that sort of elevated us this year, but then from this year forward should grow at a more typical rate. You know, I think the typical rate we would put around probably 5% for general items. The other expenses that will grow differently than sort of that core rate, obviously, are anything associated with premiums or assets under management and the like. Those will grow dollar for dollar with those related revenues. You're talking about the general operating expenses. You know, for me, somewhere in the mid-single digits, say 5% is sort of our baseline, and then you make some decisions above and beyond that. Hope that helps. Yeah. That's really helpful. Thank you. That concludes today's Primerica Q4 2021 Earnings Results C onference Call and Webcast. Thank you for your participation. You can now disconnect your line.