PRI 10-K & 10-Q changes, risk factors and insider trading

From time to time, various jurisdictions make changes to the state or provincial licensing examination process that may make it more difficult for independent sales representatives to obtain or retain their life insurance and/or securities licenses. For example, the Financial Industry Regulatory Authority (“FINRA”) has changed the continuing education (“CE”) regulatory requirement from a three-year period to an annual requirement for securities-licensed representatives. In addition, the North American Securities Administrators Association approved a model rule for participating states that imposes a CE requirement for investment adviser representatives. Such changes place an increased burden on independent sales representatives to maintain their securities licenses, which could negatively impact the size of the active securities sales force in the event that representatives do not complete the applicable CE requirements on a timely basis.

We have not been, and are not currently, subject to business opportunity laws because the amounts paid by the new independent sales representatives to us: (i) are less than the minimum thresholds set by many state statutes and (ii) are not fees paid for the right to participate in a business, but rather are for bona fide expenses such as state-required insurance examinations and pre-licensing training. We have not been, and are not currently, subject to franchise laws for similar reasons. However, there is a risk that a governmental agency or court could disagree with our assessment or that these laws and regulations could change. In addition, we do not believe that the Federal Trade Commission’s (“FTC”) current Business Opportunity Rule applies to the Company. On January 13, 2025, the FTC announced proposed amendments to the Business Opportunity Rule that would expand the rule but also would exempt models like ours from its scope. Nonetheless, the rule ultimately could be amended or interpreted in a manner inconsistent with our current interpretation. Becoming subject to business opportunity or franchise laws or regulations could require us to provide additional disclosures and regulate the manner in which we recruit independent sales representatives that may increase the expense of, or adversely impact our recruitment of, new independent sales representatives.

There are various laws and regulations, including laws of general application such as the Federal Trade Commission Act (“FTC Act”), which prohibit fraudulent or deceptive practices, including but not limited to, pyramid schemes and misrepresentations regarding distributors’ earnings potential. On January 13, 2025, the FTC announced a proposed Earnings Claims Rule Regarding Multi-Level Marketing with an embedded Advance Notice of Proposed Rulemaking regarding earnings claims. Likewise, theThe FTC has exercised its Penalty Offense Authority found in Section 5(m)1(B) of the FTC Act by issuing Notices of Penalty Offenses as a reminder of the law on earnings claims and as a deterrence against violations. The application of these laws and regulations to a given set of business practices is inherently fact-based and, therefore, is subject to interpretation by applicable enforcement authorities. Although we believe that our business practices comply with applicable laws and regulations, there is a risk that a governmental agency or court could disagree with our assessment, or that these laws and regulations could change in actuality or in application, which could require us to restructure our operations or result in regulatory fines, penalties or other costs, or reputational harm, or could otherwise adversely affect our business, financial condition and results of operations. Additionally, if an earnings claims rule like that proposed by the FTC were to become final, it could have an adverse impact on our recruitment and sales.

The classification of workers as independent contractors continues to be the subject of increasing federal, state and provincial legislative, regulatory and judicial interest. Legislative and regulatory proposals have been introduced by federal and state authorities, and judicial decisions have been made, that call for or result in greater scrutiny of independent contractor classifications. In January 2024, the DOL, issued a final rule interpreting the “economic realities” worker classification standard applicable to the Fair Labor Standards Act. The DOL’s interpretation generally aligns with legal precedent, relying on an analysis of six typical factors indicating worker status and taking into account the “totality of the circumstances”. Other federal and state legislative and regulatory proposals regarding worker classification have also come under consideration. It is difficult to predict what the outcome of worker classification activity may be. Changes to worker classifications could have a material adverse impact on our business, financial condition and results of operations because sales representatives are independent contractors.

In addition to imposing requirements on independent sales representatives when dealing with clients, federal, state, provincial and territorial laws and regulations generally require us to maintain a system of controls and supervision reasonably designed to ensure that independent sales representatives comply with the requirements to which they are subject. We have policiespolicies, procedures and procedurescontrols to comply with these laws and regulations. Further, at any given time, we may have pending state, federal or provincial examinations or inquiries of our investment and savings products, insurance, mortgage, and other businesses. However, despite these compliance and supervisory efforts, the breadth of our operations and the broad regulatory requirements could result in oversight failures and instances of non-compliance or violations on the part of the Company or independent sales representatives.

Our life insurance business may face significant losses or volatility if our actual experience differs from our expectations regarding mortality, reinsurance, persistency, disability or reinsurance.disability.

MostAll U.S. states have adopted, and others are proposing to adopt, NAIC-approvedadopted rules requiring insurance producers to act in the “best interest” of consumers when recommending an annuity. In addition, theThe New York Department of Financial Services as amended itsServices’ “best interest” rules that apply to both life insurance and annuities. These rules impose a higher standard of care than previously required, as well as enhanced disclosures and other obligations with respect to recommendations, which may increase our regulatory or litigation risk.

Federal and provincial insurance laws regulate all aspects of our Canadian insurance business. Changes to federal or provincial statutes and regulations may be more restrictive than current requirements or may result in higher costs, which could materially adversely affect our business, financial condition and results of operations. If the Office of the Superintendent of Financial Institutions (“OSFI”) determines that our corporate actions do not comply with applicable Canadian law, Primerica Life Insurance Company of Canada (“Primerica Life Canada”) could face sanctions or fines,fines and be subject to increased capital requirements or other requirements.

We rely on a limited number of reinsurersreinsurance in the United States and Canada to diversify our risk and to manage our loss exposure to mortality risk. Reinsurance does not relieve us of our direct liability to our policyholders, even when the reinsurer is liable to us. We, as the insurer, are required to pay the full amount of death benefits even in circumstances where we are entitled to receive payments from the reinsurer. Our reinsurers may be unable to pay the amounts they owe us on a timely basis or at all. Further, reinsurers might refuse or fail to pay losses that we cede to them or might delay payment. Since death benefit claims may be paid long after a policy is issued, we bear credit risk with respect to our reinsurers. The creditworthiness of our reinsurers may change before we can recover amounts to which we are entitled. Any such failure to pay by our reinsurers could have a material adverse effect on our business, financial condition and results of operations.

We also have in place coinsurance agreements that we originally entered into at the time of our initial public offering (the “IPO”) in 2010, pursuant to which we ceded between 80% and 90% of the risks and rewards of our term life insurance policies that were in force at year-end 2009. Under this arrangement, our existing reinsurance agreements remain in place. Each coinsurer entered into trust agreements with our respective insurance subsidiaries and a trustee pursuant to which the coinsurer placed assets (primarily treasuryfixed-income securities and fixed-incomeU.S. Treasury securities) in trust for such subsidiary’s benefit to secure the coinsurer’s obligations to such subsidiary. Each such coinsurance agreement requires the relevant coinsurer to maintain assets in trust, the amount of which will not be less than the amount of the statutory reserves for the coinsured liabilities. In Canada, the IPO coinsurer must hold pledged assets in an amount sufficient for us to take credit for reinsurance in a Canadian financial institution, not affiliated with the IPO coinsurer. Our Canadian insurance company has an enforceable security interest that has priority over any other security interest for the pledged assets. Furthermore, our insurance subsidiaries have the right to recapture the business upon the occurrence of an event of default under their respective coinsurance agreement subject to any applicable cure periods. While any such recapture would be at no cost to us, such recapture would result in a substantial increase in our insurance exposure and require us to be fully responsible for the management of the assets set aside to support statutory reserves. The type of assets we might obtain as a result of a recapture may not be as liquid as our current invested asset portfolio and could result in an unfavorable impact on our risk profile.

Our subsidiary broker-dealers, Primerica Brokerage Services, Inc. (“PBSI”) and PFS Investments Inc. (“PFS Investments”), and the independent sales representatives, are subject to federal and state regulation of the securities business. PFS Investments is additionally a registered investment adviser and its investment adviser representatives likewise are held to a high standard of conduct. Our subsidiary, Primerica Shareholder Services, Inc. (“PSS”), is a registered transfer agent engaged in the recordkeeping business and is subject to regulation by the Securities and Exchange Commission (“SEC”). Violations of, or non-compliance with, laws or regulations applicable to the activities of PFS Investments or PSS, or violations by a third party with which PFS Investments or PSS contracts, could subject us to regulatory actions and/or litigation. Such events could result in the imposition of cease and desist orders, fines or censures, restitution to clients, suspension or revocation of SEC registration, suspension or expulsion from FINRA, reputational damage and legal expense, any of which could materially adversely affect our business, financial condition and results of operations.

Our Canadian broker-dealer subsidiary, PFSL Investments Canada Ltd. (“PFSL Investments Canada”) and the independent sales representatives are subject to the securities laws of the provinces and territories of Canada in which we sell our mutual fund products and to the rules of the Canadian Investment Regulatory Organization (“CIRO”), the self-regulatory organization governing mutual fund dealers (except in the province of Quebec, the Autorité des Marchés Financiers (“AMF”)). PFSL Investments Canada is subject to periodic review by both the CIRO and the provincial and territorial securities commissions to assess its compliance with, among other things, applicable capital requirements and sales practices and procedures. These regulators have broad administrative powers and may impose sanctions that could materially adversely affect our business, financial condition and results of operations.

The U.S. independent sales representatives are subject to federal and state regulation as well as state licensing requirements. PFS Investments, which is regulated as a broker-dealer and registered investment adviser, and U.S. independent sales representatives are currently subject to general anti-fraud limitations under the Securities Exchange Act of 1934, as amended, the Investment Advisers Act of 1940 (the “Investment Advisers Act”) and SEC rules and regulations, as well as other conduct standards prescribed by the FINRA. These standards generally require that broker-dealers, investment advisers, and their sales representatives disclose and mitigate conflicts of interest that might affect the advice or recommendations they provide and require them to make investment recommendations in the best interest of customers. In 2019, the SEC adopted rules addressing the standards of conduct applicable to broker-dealers and their associated persons (collectively, “Reg BI”). Among other things, Reg BI created a “best interest” standard of conduct similar to the fiduciary standard applicable to investment advisers. In 2020,addition, the DOL issuedhas PTEissued, 2020-02,and anmay exemption for the retention of compensation by a fiduciary. In October 2023, the DOL proposed a new definitioncontinue to determineissue, proposals that regulate fiduciary status and proposedrelated amendmentsfiduciary to PTE 2020-02, among other proposals.requirements. Reg BI and the DOL regulations impose higher standards of care and enhanced obligations that increase regulatory and litigation risk to our business.

The organization of provincial and territorial securities regulators (collectively referred to as the Canadian Securities Administrators (“CSA”)) implemented rule amendments that prohibit up-front sales commissions by fund companies for the sale of mutual funds offered under a prospectus in Canada (the “DSC Ban”), effective June 1, 2022. DuringIn 2022, in response to the DSCregulatory Ban,ban on the compensation model we primarily used in Canada, we began to offer through the independent sales representatives, a unique and exclusive range of funds under Principal Distributor agreements (the “PD Funds”) with two third-party mutual fund companies (the “Principal Distributor model”).

While we received regulatory approval for the Principal Distributor model,model in 2022, we were advised at the time of approval that the CSACanadian Securities Administrators intends to closely re-examine the Principal Distributor provisions of National Instrument 81-105, through a public Request for Comment that was released on November 28, 2024. The Request for Comment proposes banning multiple fund manager relationships with one principal distributor, an arrangement we have in our Canadian mutual fund business. If this proposal is adopted and we are not granted an exemption, then we could be required to restructure our Principal Distributor model for the sale of mutual funds, or discontinue use, which could have a material adverse effect on our investment advisory business in Canada.

The Canadian Council of Insurance Regulators mandated a cessation of deferred sales charges on segregated fund contracts entered into after May 31, 2023. Deferred sales charges will continue to be allowed on subsequent deposits of existing segregated funds contracts for a period of time; however, insurance regulators will be further evaluating whether to allow its continued use. As we anticipated, we experienced a decline in segregated funds product sales beginning in June 2023. We expect to begin distributing segregated funds on behalf of a third party in 2025 which could be negatively impacted if there is further regulation on allowable segregated funds compensation practices and could have a further material adverse effect on Primerica Life Canada’s investment and savings products business.

Licensing requirements will impact the size of the mortgage loan independent sales force, which could adversely affect our mortgage brokerage business.

To offer mortgage loan products, independent sales representatives must be individually licensed as mortgage loan originators by the states in which they do business and, in some states, they must also be individually licensed as mortgage brokers. These licensing requirements include enrollment in the Nationwide Multistate Licensing System, application to state regulators for individual licenses, a minimum of 20 hours of pre-licensing education, an annual minimum of eight hours of CE, and the successful completion of both national and state tests or a national test with uniform state content. Compliance with these licensing regimes (including passing the applicable exam, background checks and credit checks) haveoften proven to beis a barrier for many independent sales representatives. In addition, the tests have historically been challenging for the independent sales representatives to pass. Primerica Mortgage, LLC (“Primerica Mortgage”) must also be licensed at the company level as a mortgage broker (or equivalent) and, in almost all states, representatives’ offices must be licensed as branch offices. To offer mortgage loans in a state, independent sales representatives, offices, and Primerica Mortgage must be licensed as required by state law. These licenses must be renewed on an annual basis. FailureFailure, or the inability due to state restrictions, of independent sales representatives to obtain the required licenses and comply with ongoing licensing requirements would adversely affect the size of the mortgage loan sales force, which could adversely affect our mortgage brokerage business.

Our U.S. mortgage brokerage and Canadian mortgage referral business is highly regulated and subject to various federal, state and provincial laws and regulations in the U.S. and Canada. Changes in, non-compliance with, or violations of, such laws and regulations could affect the cost or our ability to distribute our products and could adversely affect our business, financial condition and results of operations.

Our U.S. mortgage brokerage business is subject to a wide array of laws at the federal, state, and local levels. It is regulated by federal, statelevels and local regulators, including the Consumer Financial Protection Bureau, state mortgage and licensing regulators, state attorneys general, state and local consumer protection offices, the FTC, the Department of Housing and Urban Development, and the Department of Justice,Justice. whichEach haveof thethese authorityauthorities tomay examine, supervise, investigate, and enforce applicable laws, regulations and policies. Federal law and regulations impose prohibitions and restrictions on the manner and amount of compensation paid and incentives offered in connection with a mortgage loan transaction and establish a federal ability to repay standard for all mortgage loans. Other laws could have the effect of limiting the availability of certain loan products in the market and adversely impact the range of products offered and the volume of loan business.

Additionally, we must comply with various state and local laws and policies concerning the lender, compensation,compensation and incentives, fair lending, supervision, the provision of consumer disclosures, net branching, predatory lending and high cost loans and recordkeeping. Differing interpretations of, changes in, or violations of, any of these laws or regulations could subject us to damages, fines, or sanctions and could affect the cost or our ability to distribute our products, which could materially adversely affect our business, financial condition, and results of operations. Remediation for noncompliance with federal, state or local laws could be costly and significant fines may be incurred. Failure to comply with applicable laws could result in potential litigation liability. Further, the lender must comply with applicable federal, state, and local laws and regulations, and any noncompliance by such lender may adversely impact our U.S. mortgage brokerage business.

Through a contractual agreement with Rocket Mortgage, LLC, Primerica Mortgage offers mortgage loans through the independent sales representatives who are licensed as mortgage loan originators. Primerica Mortgage also offers, through its mortgage loan originators, second mortgages and home equity lines of credit based on a contractual agreement with Spring EQEQ, LLC. A significant change to or disruption in the lenders’ businesses or their inability to satisfy their contractual obligations to Primerica Mortgage could have an adverse impact on our business, financial condition and results of operations.

The U.S. Federal Reserve, which serves as the primary driver of U.S. monetary policies impacting mortgage interest rates, implemented multiple interest rate increases over recent years to address continued elevated inflation. Although the U.S. Federal Reserve implemented moderate interest rate decreases in 2024 and 2025, mortgage interest rates remain elevated. Elevated mortgage interest rates lowered the demand for refinance mortgages and purchase-money mortgages offered by Primerica Mortgage. Continued elevated mortgage interest rates relative to recent market rates could continue to impact consumer demand for refinance mortgages and purchase-money mortgages, which could have an adverse impact on our mortgage brokerage business in the U.S.

Our business, financial condition and results of operations may be materially adversely affected by economic downturns in the United States and Canada, as well as issues in the national, regional and/or global economy such as elevated inflation resulting in a higher cost of living that may have repercussions on our markets. Economic downturns can result from a multitude of reasons and are often characterized by conditions such as elevated inflation and higher cost of living, declines in capital markets, higher unemployment, lower household income, lower valuation of retirement savings accounts, lower corporate earnings, lower business investment and/or lower consumer spending. These conditions can impact the disposable income of middle-income consumers, which can influence their spending and investment decisions. With respect to our term life insurance business, we may continue to experience an elevated incidence of lapses or surrenders of term life insurance policies, which adversely impacts the amount of insurance premiums we collect. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. InFactors 2024,that significantly impact consumer demand for the savings and investment products we distribute include interest rates, equity market returns and our customers’ perception of the strength of the capital marketsmarkets. continuedBetter toreturns impact consumer demand for the savings and investment products we distribute. Elevatedfrom interest rates relative to the performance of the equity markets and the perceived attractiveness of investing in equity markets versus other investments, such as U.S. Treasury bills and money market funds, could adversely impact consumer demand for the mutual funds, annuities, and managed accounts we distribute. Continued elevated producer prices have caused and may continue to cause higher labor costs and increased vendor and supplier costs. Economic conditions, including continued elevated producer prices have impacted and may continue to impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers, which can drive or dampen recruiting.

Our operations are exposed to the risk of major public health pandemics, epidemics or outbreaks (a “major public health crisis”), such as the COVID-19 pandemic, or other catastrophic events (“catastrophic events”), which, among other things, has caused and could again cause a large number of premature deaths of our insureds. Although we have ceded a significant majority of our mortality risk to reinsurers, a major public health crisis or catastrophic event could cause: (i) substantial volatility in our financial results for a period of time; (ii) material harm to the financial condition of our reinsurers; (iii) increases in the probability of default on reinsurance recoveriesrecoverables; (iv) decreases in the availability of reinsurance on new business; or (v) increases in reinsurance costs on new business and/or rates during the post-level term period. In addition, most of the jurisdictions in which our insurance subsidiaries are licensed to transact business require life insurers to participate in guaranty associations, which raise funds to pay contractual benefits owed pursuant to insurance policies issued by impaired, insolvent or failed issuers. A major public health crisis or catastrophic event could require extraordinary assessments on our insurance companies, which could have a material adverse effect on our business, financial condition and results of operations.

Our infrastructure supports a combination of local and remote recovery solutions for business resumption in the event of a disaster, including a security incident. Our Canadian and U.S. operations utilize a data center located in our main campus in Duluth, Georgia. In the event of either a main campus destruction or the inability to access our data center or main campus in Duluth, Georgia, our business recovery plan provides for our employees to perform their work functions via a dedicated business backup/recovery site located about 20 miles from our main campus or by remote access from an employee’s home. In addition to this site, the Company uses a business resumption vendor that will provide the hardware required for recovery within a reasonable timeframe in the event of a disaster. However, in the event of main campus destruction, our business recovery plan may be inadequate, and our employees and the independent sales representatives may be unable to carry out their work immediately, which could have a material adverse effect on our business, financial condition and results of operations.

We are subject to international, federal, state, and provincial regulations, and in some cases contractual obligations, that require us to establish and maintain policies and procedures designed to protect sensitive customer, employee, independent sales representative and third-party information. We have implemented and maintain security measures, including industry-standard commercial technology, designed to protect against breaches of security and other interference with our systems and networks resulting from attacks by third parties, including hackers, and from employee or independent sales representative error or malfeasance. We continually assess our ability to monitor, respond to, and recover from such threats. WeIn accordance with these laws and our security practices, we also require third-party vendors, who in the provision of services to us are provided with or process information pertaining to our business or our customers, to meet certain information security standards. Despite the measures we have taken and may in the future take to address and mitigate cybersecurity and technology risks, we cannot assure that our systems and networks will not be subject to breaches or interference. Any such breaches or interference by third parties or by independent sales representatives or employees that may occur in the future, including the failure of any one of these systems for any reason, could cause significant interruptions to our operations, which could have a material adverse effect on our business, financial condition and results of operations.

Various international, federal and state legislative and regulatory bodies are considering or have considered, proposed, or adopted new standards and rules regarding protection of personally-identifiable information. All 50 U.S. states and Canada have breach notification requirements. New York State Department of Financial Services’ Cybersecurity Requirements for Financial Services Companies (“NYDFS Cybersecurity Requirements”) require covered financial services institutions to implement a cybersecurity program with policies and controls designed to protect information systems and data. The NAIC has adopted the Insurance Data Security Model Law (“Model Law”), which among other things, requires insurers and insurance producers to develop and maintain a written information security program, conduct risk assessments, and assess the data security practices of third-party service providers. The Model Law, which has some similarities as well as differences from the NYDFS Cybersecurity Requirements, has been adopted by a significant number of states. InThe May 2024, the SEC adopted amendments toSEC’s Regulation S-P that imposeimposes cybersecurity requirements on covered entities regarding policies and procedures, incident response and notification procedures, and cybersecurity risk management. In addition, various regulators and legislators are proposing, have proposed, and have passed more stringent privacy requirements, including the California Consumer Privacy Act of 2018, its updates in the California Privacy Rights Act of 2023, and related regulations (“CCPA”). The CCPA is designed to give consumers more control over their personal data and imposes strict liability for security incidents under certain circumstances.

A large percentage of our invested asset portfolio is invested in fixed-income securities. As a result, credit deterioration and interest rate fluctuations could materially affect the value of and earnings generated by our invested asset portfolio. During periods of declining market interest rates, we must invest the cash we receive as interest, return of principal on our investments and cash from operations in lower-yielding, high-grade instruments or in lower-credit instruments to maintain comparable returns. Issuers of fixed-income securities could also decide to prepay their obligations to borrow at lower market rates, which would increase our reinvestment risk. If interest rates generally increase, the fair value of our fixed rate income portfolio decreases. Additionally, if the fair value of any security in our invested asset portfolio decreases, we may realize losses if we deem the value of the security to be impaired due to a credit loss. We also have an asset on deposit with a coinsurer backing a 10% coinsurance agreement entered into at the time of our IPO. The fair value of this asset is influenced by fluctuation in credit spreads and interest rates, and changes in fair value are recognized in income. To the extent that any fluctuations in fair value or interest rates are significant or we recognize impairments that are material, it could have a material adverse effect on our business, financial condition and results of operations.

Our portfolio of invested assets primarily consists of fixed-maturity securities that are classified as available-for-sale. When the fair value of any of our available-for-sale invested assets declines below amortized cost, an impairment exists and we recognize a loss in either our consolidated statement of income or in other comprehensive income based on our assessment of expected credit losses. The determination of the fair value of certain invested assets, particularly those that do not trade on a regular basis, requires an assessment of available data and the use of assumptions and estimates. Once it is determined that the fair value of an available-for-sale security is below its carrying value, we first determine if we intend to sell or will more-likely-than-notmore likely than not be required to sell the security before the expected recovery of its amortized cost. If we intend to sell or will more-likely-than-notmore likely than not be required to sell the security, then we recognize the impairment as a credit loss in our consolidated statement of income by writing down the security’s amortized cost to its fair value. If we do not intend to sell or it is not more-likely-than-notmore likely than not that we will be required to sell the security before the expected recovery of its amortized cost, we recognize the portion of the impairment that is due to a credit loss, if any, in our consolidated statement of income through an allowance. The portion of the impairment that is due to factors other than a credit loss is recognized in other comprehensive income in the consolidated statement of comprehensive income as an unrealized loss. The determination of whether an impairment is due to credit factors is subjective and involves a variety of assumptions and estimates.

Risks Related to Legislative and Regulatory Changes and Government Policy Uncertainty

We are subject to various federal, state and provincial laws and regulations in the United States and Canada, changesas inwell as executive branch actions, orders and policies, judicial rulings and decisions by public officials, any of which may require us to alter our business practices and could materially adversely affect our business, financial condition and results of operations.

Our business is subject to many laws, regulations and government policies that could relate to, among other things, consumer protection, fair credit reporting, financial privacy, consumer fraud, anti-money laundering, worker classification standards, worker eligibility, corporate taxation, artificial intelligence or algorithmic underwriting, and transactions with certain countries. These laws and regulations often are subject to the political climate.

Changes in any of these lawslaws, regulations or regulationsgovernment policies may require additional compliance procedures, which could have a material adverse effect on our business, financial condition, and results of operations.

TheUncertainty currentin the legislative and regulatory climate with regard to financial services may adversely affect our business, financial condition, and results of operations.

The volume and purpose of legislativelegislative, regulatory and regulatoryexecutive activity relatingrelated to financial services has increased substantially in recent years, and the level of enforcement actions and investigations by federal, state and provincial regulatorsauthorities may increasevary correspondingly.based on the political climate. Legislative, regulatory and enforcement activity at the federal levellevel, whether considerable or not, may contribute to heightened activity at the state and provincial level. In addition, volatility in the objective and permanency of laws and regulations may lead to uncertainty. If we or the independent sales representatives become subject to new requirements or regulations,regulations or experience voluminous changes in laws, it could result in increased litigation, regulatory risks, changes to our business model, a decrease in the number of securities-licensed representatives, increased compliance costs, or a reduction in the products we offer to our clients or the profits we earn, which could have a material adverse effect on our business, financial condition and results of operations.

OnFor example, on October 7, 2023, California enacted The Climate Corporate Accountability Act (“SB 253”) and The Climate-Related Financial Risk Act (“SB 261”), which impose extensive new climate-related reporting requirements on any U.S. business entity with annual revenues over $1 billion and $500 million (for SB 253 and SB 261, respectively) doing business in California. SB 253 requires disclosure of Scope 1 and 2 greenhouse gas (“GHG”) emissions beginning in 2026 and Scope 3 GHG emissions beginning in 2027. SB 261 requires covered entities to biennially report on climate-related financial risk and measures adopted to reduce and adapt to such risk; however, the Company appears to beis exempt from SB 261 because it already completes the Climate Risk Disclosure Survey, an annual survey administered by the California Department of Insurance. The Company is awaiting clarification as to whether the Company is exempt from SB 261. On September 27, 2024, California enacted Senate Bill 219 (“SB 219”), amending SB 253 and SB 261 by, among other things, (i) extending the deadline for the California Air Resources Board (“CARB”) to implement regulations from January 1, 2025 to July 1, 2025; (ii) authorizing reporting entities to consolidate emissions disclosures at the parent company level; and (iii) granting CARB discretion to set Scope 3 GHG emissions disclosure in 2027. InRegulations addition,from onCARB Marchpursuant 7,to 2023,SB OSFI219 issuedare itsexpected finalto Guidelinebe B-15,released which sets out expectations forin the managementfirst and disclosurequarter of climate-related risks for federally regulated financial institutions in Canada, including disclosure of Scope 1, 2 and 3 GHG emissions by the end of 2025. Guideline B-15 also includes OSFI’s expectation that applicable entities to conduct internal and standardized climate scenario analyses and report the results to OSFI periodically. OSFI’s Standardized Climate Scenario Exercise, which was due in December 2024, was intended to help OSFI assess exposure to climate-related risks among the entities it regulates for future reporting to OSFI. Compliance with SB 253, SB 261, SB 219, Guideline B-15 and any other climate disclosure rules applicable to the Company may require significant assistance from third-party vendor(s). Factors that could adversely impact our ability to comply with any new climate disclosure rules include, but are not limited to, failure to secure the assistance of a third-party vendor(s), inability to gather the requisite data in a timely manner or at all, and/or significant associated financial costs.2026.

We face competition in all of our business lines. Our competitors include financial services companies, banks, investment management firms, broker-dealers, registered investment advisers, insurance companies, insurance brokers, direct sales companies, and technology companies. In many of our product offerings, we face competition from competitors that may have greater market share or breadth of distribution, offer a broader range of products, services or features, assume a greater level of risk, have lower profitability expectations, have lower fee and expense ratios, have higher financial strength ratings, offer more robust digital tools and self-service capabilities than we do or made use of emerging technologiestechnologies, including AI, more fully or rapidly than us. More recently, significant capital has been invested in direct-to-consumer offerings, including wealth management, retirement and life insurance products. In addition, regulatory changes and competitive factors are leading to innovations in product offerings and compensation structures. To the extent these entrants create a significant change in the competitive environment, our ability to maintain or increase our market share and profitability could be materially adversely affected.

Further, our success substantially depends on our ability to attract and retain members of our senior management team. The efforts, level of engagement, and leadership of our senior managers have been, and will continue to be, critical to our success. ManyThe Company anticipates a steady pace of retirements within our most senior managersmanagement team in the years to come. While our senior management talent and succession plans and processes are very tenuredreviewed and weupdated expectroutinely, instances of retirement in 2025. Thethe loss of service of members of our senior management team for any reason and without adequate succession planning and talent management could reduce our ability to successfully motivate the independent sales representatives or implement our business plan, which could have a material adverse effect on our business, financial condition and results of operations. Although our executive officers have entered into employment agreements with us, there is no assurance that they will complete the term of their employment agreements or that such agreements will be renewed.

Our mission to create financially independent families has remained unchanged. In early 2025, we updated our corporate strategy to re-align our mission, strategic vision, guiding principles and growth pillars to help us continue to deliver on our mission. An inability to effectively execute our corporate strategy could have a material adverse effect on our business, financial condition and results of operations.

The Canadian dollar is the functional currency for our Canadian subsidiaries and our financial results, reported in U.S. dollars, are affected by changes in the currency exchange rate. The assets, liabilities, revenues, and expenses of our Canadian subsidiaries are generally all denominated in Canadian dollars. However, the Canadian dollar financial statements of our Canadian subsidiaries are translated into U.S. dollars in our consolidated financial statements.statements included elsewhere in this report. Therefore, significant exchange rate fluctuations between the U.S. dollar and the Canadian dollar could have a material adverse effect on our financial condition and results of operations. A weaker Canadian dollar relative to the U.S. dollar would result in lower levels of reported revenues, expenses, net income, assets, liabilities and accumulated other comprehensive income as translated in our U.S. dollar reporting currency financial statements. In addition, our net investment in our Canadian subsidiaries is significantly affected by fluctuations in the exchange rate between the U.S. dollar and the Canadian dollar.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of Primerica, Inc. (the “Parent Company”) and its subsidiaries (collectively, “we”, “us” or the “Company”) for the three-year period ended December 31, 2024.2025. As a result, the following discussion should be read in conjunction with the consolidated financial statements and accompanying notes that are included herein.elsewhere in this report. This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed in “Item 1A. Risk Factors”. Actual results may differ materially from those contained in any forward-looking statements.

The relative strength and stability of the financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levelslevels, inflation and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers, which can drive or dampen recruiting.offers. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, equity market returns and interest rates impact consumer demand for the investment and savings products we distribute. Our customers’ perception of the strength of the capital markets may also influence their decisions to invest in the investment and savings products we distribute. We believe the economic conditions impacting middle-income households underscore their increasing need for our financial education, products and services to assist them in reaching the long-term goal of becoming financially independent.

SignificantThe cumulative impact of inflation thatin followedrecent the peak of the COVID-19 pandemicyears has led to an elevated cost of living for middle-income families.families, Wewhich we believe that the higher cost of living has adversely impacted persistency for term life insurance policies. WhilePolicy thelapse rate of inflation has been normalizing from its peak in 2022, lapsesrates of term life insurance policies haveproducts remained above long-term historical levels.levels in 2025 but have been steady in the aggregate of all policy durations compared to the prior year. In addition, continued economic uncertainty in 2025 has had an impact on consumer behavior. The continuation of the elevatedthese cost of living pressures as well as economic uncertainty could adversely impact demand for our products.

The effects of these trends and conditions are discussed below, in the Results of Operations section and in the Financial Condition section.sections.

The number of life-licensed independent sales representatives increasedremained eachrelatively yearflat reflectingduring strong2025 recruitingcompared andto 2024 as agent licensing activity aswas discussedconsistent above.with agent non-renewals.

Term Life Insurance Product Sales and Face Amount In Force. The average number of life-licensed independent sales representatives and the number of term life insurance policies issued, as well as the average monthly rate of new policies issued per life-licensed independent sales representative (historically between 0.20 and 0.24, as adjusted (1)),representative, were as follows:

The average number of life-licensed independent sales representatives increased eachin year2025 compared to 2024 as a result of the cumulative impact of strong recruiting and licensing activity throughout 2024 that drove growth in the size of thehigher independent sales force ascounts discussedat above.the beginning of and throughout 2025 compared to 2024.

Productivity in 2024, 2023, and adjusted 20222025 measured by the average monthly rate of new policies issued per life-licensed independent sales representative,representative wasdecreased from 2024. The combination of lower life insurance policy sales as discussed above and growth in linethe withsize ourof adjustedthe historicalindependent range.sales force since the beginning of 2024 contributed to lower productivity.

The face amount of term life insurance policies in-force increased eachfrom year2024 to 2025 as the face amount issued continued to exceed the face amount terminated. Issued face amountsamount increaseddecreased eachduring year2025 compared to 2024 primarily due to the increasedecrease in the number of new term life insurance policies issued as discussed above. Policy terminations remained relatively flat during 2025 compared to 2024. During 2025, the strengthening of the Canadian dollar relative to the U.S. dollar contributed to the increase in face amount.

Product sales. Investment and savings product sales increased in 20242025 from 2023,2024, primarily due to oursustained abilitypositive toinvestor leveragesentiment increasedthat demandfollowed across all product lines except for Canadian segregated funds. The increase in demand was driven bygenerally strong equity market performance in the2023 periodthrough leading up to and including 2024.2025. In particular, variable annuity product sales continued to lead the growth in salesgrow as the guarantees offered by these products have becomebecame more appealing to investors given strong equity market performanceperformance, expanded product offerings, and elevated interest rates.rates Marginallyleading offsettingup to and continuing through 2025. In addition, the increase in product sales wasfor lowermanaged year-over-yearinvestments salesresulted from continued strength in investor demand for these products as well as the expansion of Canadianinvestment segregatedstrategies fundsoffered on our platform. These trends have been further aided by the growing population of investors that are reaching retirement age and seeking the protection provided by annuity products as saleswell ofas investmentsthe ininvestment newadvisory Canadianservices segregatedand fundbroader products offered through our managed accounts significantly decreased after May 2023 due to implemented regulations in Canada. See “Regulatory Changes” below for more information on Canadian regulations.program.

Rollforward of client asset values. Ending clientClient asset values increased in 20242025 from 20232024 primarily due to thestrong differences inequity market performanceperformance. duringPositive each respective year. Netnet flows increased in 2024 from 2023. Partially offsetting the increase wasand movement in the foreign exchange rate as the U.S.Canadian dollar strengthened in relationrelative to the CanadianU.S. dollar,dollar whichalso negativelycontributed impactedto the increase in client asset values during 2024.2025.

Average client asset values. Average client asset values increased in 20242025 compared to 2023.2024 The increase wasprimarily driven by the cumulative effect of strong market performance and net client inflows, partially offset by the effect of a stronger U.S. dollar in relation to the Canadian dollar.inflows.

Average number of fee-generating positions. The average number of fee-generating positions increasedwas higher in 20242025 compared to 2023 and in 2023 compared to 20222024 primarily due to the continued cumulative effect of retail mutual fund sales in recent periods that led to an increase in the number of retail mutual fund positions serviced on our transfer agent recordkeeping platform.

Sales and policies in-force. Sales of term life insurance policies and the size and characteristics of our in-force book of policies are vital to our results over the long term. Premium revenue is recognized as it is earned over the term of the policy. However, because we incur significant cash outflows at or about the time policies are issued, including the payment of sales commissions and underwriting costs, changes in life insurance sales volume in a period will have a more immediate impact on our cash flows than on revenue.

Historically, weWe have found that while sales volume of term life insurance products between fiscal periods may vary based on a variety of factors, the productivity of independent sales representativesrepresentatives. generallyAccordingly, remains within a range (i.e., an average monthly rate of new policies issued per life-licensed independent sales representative between 0.20 and 0.24, as adjusted). Thethe volume of term life insurance products sales will fluctuate in the short term, but over the longer term, our sales volume generally correlates to the size of the independent sales force.

Disability. Our profitability will fluctuate to the extent actual disability rates underlying our waiver of premium benefits, including recovery rates for individuals currently disabled, differ from actuarial assumptions. The waiver of premium benefit is secondary to the death benefit coverage provided. However, the waiver of premium benefit is not reinsured on a yearly renewable term (“YRT”) basis and material changes in assumptions compared to expectations can have a disproportionate impact on our financial results.

We may alter our reinsurance practices at any time due to the unavailability of YRT reinsurance at attractive rates or the availability of alternatives to reduce our risk exposure. We intend to continue ceding approximately 90% of our U.S. and Canadian mortality risk on new business.

Asset values in client accounts. We earn marketing and distribution fees (trail commissions or, with respect to U.S. mutual funds, 12b-1 fees) on mutual fund and annuity assets in the United States and Canada. In the United States, we also earn investment advisory and administrative fees and marketing support fees on assets in managed investments. In Canada, we earn marketing, distribution, and shareholder services fees on mutual fund assets for which we serve as the principal distributor and management fees on theour legacy segregated funds for which we serve as investment manager.funds. Asset values are influenced by new product sales, ongoing contributions to existing accounts, redemptions and the change in market values in existing accounts. While we offer a wide variety of asset classes and investment styles, our clients’ accounts are primarily invested in equity funds. Volatility in equity markets will impact the value of assets in client accounts and, as a result, the revenue we earn on those assets.

Sales mix. While our investment and savings products all provide similar long-term economic returns to the Company, ourOur results in a given fiscal period will be affected by changes in the overall mix of products within these categories. Examples of changes in the sales mix that influence our results include the following:

sales of annuity products in the United States will generate higher revenues in the period when such sales occur thancompared to sales of other investment products that either generate lower up-front revenues or, in the case of managed investments and segregated funds,investments, no up-front revenues;

sales of a higher proportion of managed investments,investments and Canadian mutual funds, and segregated funds products will spread the revenues generated over time because we earn higher revenues based on assets under management for these accounts each period as opposed to earning up-front revenues based on product sales; and sales of a higher proportion of mutual fund products sold in the United States will impact the timing and amount of revenue we earn given the distinct transfer agent recordkeeping and non-bank custodial services we provide for certain mutual fund products we distribute.

The Corporate and Other Distributed Products segment also includes corporate income and expenses not allocated to our other segments, general and administrative expenses (other than expenses that are allocated to the Term Life Insurance and Investment and Savings Products segments), interest expense on notes payable, a redundant reserve financing transaction and our revolving credit facility (“Revolving Credit Facility”), as well as realizedrecognized gains and losses on our invested asset portfolio.

Foreign Currency. The Canadian dollar is the functional currency for our Canadian subsidiariessubsidiaries, and our consolidated financial results, reported in U.S. dollars, are affected by changes in the currency exchange rate. As such, the translated amount of revenues, expenses, assets and liabilities attributable to our Canadian subsidiaries will be higher or lower in periods where the Canadian dollar appreciates or weakens relative to the U.S. dollar, respectively.

The year-end exchange rates (U.S. dollar per Canadian dollar) used by the Company to translate our Canadian dollar functional currency assets and liabilities into U.S. dollars decreasedincreased by 8%5% in 20242025 from 2023.2024. Also,However, the average exchange rates used by the Company in 20242025 to translate our Canadian dollar functional currency revenues and expenses into U.S. dollars decreased 1%modestly, by 2% compared to 2023. The 2023 year-end exchange rates increased by 3% from 2022 and the average exchange rates decreased 4% compared to 2022.2024.

See the Results of Operations section, the Financial Condition section, and “Quantitative and Qualitative Disclosures About Market Risk – Canadian Currency Risk” and Note 4 (Segment and Geographical Information) to our consolidated financial statements included elsewhere in this report,report for more information on our Canadian subsidiaries and the impact of foreign currency on our financial results.

We prepare our financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). These principles are established primarily by the Financial Accounting Standards Board. The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions based on currently available information when recording transactions resulting from business operations. Our significant accounting policies are described in Note 1 (Description of Business, Basis of Presentation, and Summary of Significant Accounting Policies) to our consolidated financial statements included elsewhere in this report. The most significant items onin our consolidated balance sheets are based on fair value determinations, accounting estimates and actuarial determinations, which are susceptible to changes in future periods and could affect our results of operations and financial position.

Assumptions of face amounts used to amortize DAC for term life insurance policies, including persistency and mortality, are consistent with the assumptions used in estimating the LFPB. Changes in persistency would have the most notable impact on DAC amortization; however, the differences primarily affect DAC amortization on a go-forward basis. If annual lapse rate assumptions at each policy duration were 5% higher during 2024,2025, we would have recognized approximately $10 million of additional amortization of DAC expense for 2024,2025, before the impact of tax, and the rate of DAC amortization would increase in future years. Conversely, if annual lapse rate assumptions were 5% lower during 2024,2025, we would have recognized approximately $10 million of lower DAC amortization for 2024,2025, before the impact of tax, and the rate of DAC amortization would decrease in future years. We believe that a plus or minus 5% annual lapse rate change is a reasonably possible variation. Changes in persistency assumptions also impact the balance of future policy benefit reserves and reinsurance recoverables as discussed below.

The impact of unlocking assumptions, such as mortality, lapse and disability, will be partly reflected in the current period and partly spread to future periods based on the remaining duration of the impacted cohort(s). The catch-up is retroactive back to the later of the Transition Date or issue date, after reinsurance recoverables and is recognized as a remeasurement gain or loss as a separate component of benefits and claims expense in the consolidated statements of income.

The LFPB is necessarily based on estimates, assumptions and our analysis of historical experience. Factors that could cause prospective assumptions to be different from historical experience include but are not limited to changes to our term life insurance product series, economic and societal trends, new pharmaceutical drugs, and the impact of regulatory changes. The assumptions and estimates underlying the LFPB require significant judgment, and therefore, are inherently uncertain. The following table provides illustrated net impact of changes in assumptions affecting both the LFPB and reinsurance recoverables that we believe are reasonably possible, before the impact of tax:

(1) Changes in lapse, mortality and disability affect thefuture policy benefits andremeasurement claims(gain) expenseloss on the consolidated statements of income. Estimated impacts show the (decrease) / increase in income before income taxes. The assumption change sensitivities shown are based on a consistent percentage change across all policy durations.

Credit losses for available-for-sale fixed-maturity securities. For available-for-sale securities in an unrealized loss position that we intend to sell or would more-likely-than-notmore likely than not be required to sell before the expected recovery of the amortized cost basis, we recognize the impairment as a credit loss in our consolidated statements of income by writing down the amortized cost basis to the fair value. For available-for-sale securities in an unrealized loss position that we do not intend to sell or it is not more-likely-than-notmore likely than not that we will be required to sell before the expected recovery of the amortized cost basis, we recognize the portion of the impairment that is due to a credit loss in our consolidated statements of income through an allowance for credit losses. We reverse credit losses previously recognized in the allowance for credit losses in situations where the estimate of credit losses on those securities has declined. We do not consider the length of time an available-for-sale security has been in an unrealized loss position when estimating credit losses.

Insurance expenses. Reflects non-capitalized insurance expenses, including staffemployee compensation, technology and communications,communication costs, insurance independent sales force-related costs, printing, postage and distribution of insurance sales materials, outsourcing and professional fees, premium taxes, and other corporate and administrative fees and expenses related to our insurance operations. Insurance expenses also include both indirect policy issuance costs and costs associated with unsuccessful efforts to acquire new policies.

Other operating expenses. Consists primarily of staffemployee compensation, technology and communications,communication costs, various independent sales force-related costs, non-bank custodial and transfer agent recordkeeping administrative costs, outsourcing and professional fees, and other corporate and administrative fees and expenses.

Insurance expenses and other operating expenses directly attributable to the Term Life Insurance and Investment and Savings Products segments are recorded directly to the applicable segment. We allocate certain other revenue and operating expenses that are not directly attributable to a specific operating segment using methods expected to reasonably measure the benefit received by each reporting segment. Such methods include time studies, recorded usage, revenue distribution, and independent sales force representative distribution. These allocated items include fees charged for access to POL and costs incurred for technology, independent sales force support, occupancy and other general and administrative costs. Costs that are not directly charged or allocated to our two primary operating segments are included in the Corporate and Other Distributed Products segment.

Total revenues. Total revenues increased in 20242025 from 20232024 primarily due to increases in commissions and fees earned in our Investment and Savings Products segment, net premiums earned in our Term Life Insurance segment, and net investment income and investment gains earned in our Corporate and Other Distributed Products segment. Also contributing to theThis increase was partially offset by a one-time $50.0 million gain recognized in 2024 within other,Other, net revenue in our Corporate and Other Distributed Products segment2024 related to proceedspayments received under a Representation and Warranty insurance policy purchased in connectionour with the acquisition of the Senior Health business. For more information on the RepresentationCorporate and WarrantyOther insuranceDistributed policyProducts proceeds, see Note 4 (Segment and Geographical Information) to our consolidated financial statements included elsewhere in this report.segment. These movements are further discussed in detail in the Segment Results sections below.

Total benefits and expenses. Total benefits and expenses increased in 20242025 from 20232024 largely due to higher sales commissions in our Investment and Savings Products segment. InAlso addition,contributing to the year-over-year increase were higher amortization of DAC, insurance expensesDAC and benefits and claims in our Term Life Insurance segment contributed to the increase in benefits and expenses. Also contributing to the increase in 2024 was higher other operating expenses in our Investment Savings Products and Corporate and Other Distributed Products segments.segment. Insurance expenses and other operating expenses were higherincreased in 2025 compared to 2024 primarily due to higher variable growth-related costs, technology investments, and employee-related costs, whichgrowth-related includes higher incentive compensation due to strong company performance. Partially offsetting these increases was a higher future policy benefits remeasurement gain compared to 2023 in our Term Life Insurance segmentcosts and lowertechnology investments. Further discussion related to benefits and claims in our Corporate and Other Distributed Products segment. Theseexpenses movements are discussed in further detail in the Segment Results section below.

LossIncome taxes. Our effective income tax rate was 22.9% in 2025 compared to our effective income tax rate from discontinuedcontinuing operations, netoperations of income23.3% taxes.in Loss2024. fromThe discontinueddecrease operations,in netthe effective tax rate in 2025 was primarily driven by the deduction of purchased transferable federal income taxestax relates to the Senior Health business, which was disposed of as of September 30, 2024 and is reportedcredits in discontinued operations for all periods presented.2025. Refer to Note 213 (DiscontinuedIncome OperationsTaxes) to our consolidated financial statements included elsewhere in this report for further details.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to inform the reader about matters affecting the financial condition and results of operations of Primerica, Inc. (the “Parent Company”) and its subsidiaries (collectively, “we”, “us” or the “Company”) for the period from December 31, 2025 to MarchJune 31,30, 2026. As a result, the following discussion should be read in conjunction with MD&A and the consolidated financial statements and notes thereto that are included in our Annual Report on Form 10-K for the year ended December 31, 2025 (“2025 Annual Report”). This discussion contains forward-looking statements that constitute our plans, estimates and beliefs. These forward-looking statements involve numerous risks and uncertainties, including, but not limited to, those discussed under the heading “Risk Factors” in the 2025 Annual Report and in Item 1A of this Report. Actual results may differ materially from those contained in any forward-looking statements.

Term Life Insurance. We distribute the term life insurance products that we underwrite through our three issuing life insurance company subsidiaries: Primerica Life Insurance Company (“Primerica Life”), National Benefit Life Insurance Company (“NBLIC”), and Primerica Life Insurance Company of Canada (“Primerica Life Canada”). Policies remain in-force until the expiration of the coverage period or until the policyholder ceases to make premium payments. Our in-force term life insurance policies have level premiums for the stated term period. As such, the policyholder pays the same amount each year. Initial policy term periods are between 10 and 35 years. While premiums typically remain level during the initial term period, our claim obligations generally increase as our policyholders age. We cede a significant portion of the mortality risk of our term life insurance policies to third-party reinsurers to substantially reduce the uncertainty of our benefits and claims expense. In addition, we incur significant up-front costs in acquiring new insurance business.

The relative strength and stability of the financial markets and economies in the United States and Canada affect our growth and profitability. Our business is, and we expect will continue to be, influenced by a number of industry-wide and product-specific trends and conditions. Economic conditions, including unemployment levels, inflation and consumer confidence, influence investment and spending decisions by middle-income consumers, who are generally our primary clients. These conditions and factors also impact prospective recruits’ perceptions of the business opportunity that becoming an independent sales representative offers. Consumer spending and borrowing levels affect how consumers evaluate their savings and debt management plans. In addition, equity market returns and interest rates impact consumer demand for the investment and savings products we distribute. Our customers’investors’ perception of the strength of the capital markets mayand alsoprospective influencereturns theirimpact decisionsconsumer todemand invest infor the investment and savings products we distribute. We believe the economic conditions impacting middle-income households underscore their increasing need for our financial education, products and services to assist them in reaching the long-term goal of becoming financially independent.

The cumulative impact of inflation in recent years has led to an elevated cost of living for middle-income families, which may be adversely impacting persistency and demand for term life insurance policies. In the first quarterhalf of 2026, policy lapse rates of term life insurance products remained above long-term historical levels and sales of new term life insurance policies were lower versus the comparable quarterperiod in 2025.

Meanwhile, favorable demographic trends, robust client demand, expanded product offerings, and strong equity market performance in recent periods, favorable demographic trends, and expanded product offeringsperiods have provided significant momentum for our Investment and Savings Products (“ISP”) business. Despite volatility in the first quarterhalf of 2026, positive equity market performance from 2024 through 2025 and into the first quarterhalf of 2026 has beneficially influenced product sales and client asset values that drive revenue in the ISP segment.

The rise in market interest rates since the COVID-19 pandemic have largely driven the unrealized losses that have accumulated in our investment portfolio from fixed-maturity securities purchased when long-term interest rates were at historical lows. Although market interest rates edged lower at the end of 2025, interest rates increased in the first quarterhalf of 2026, resulting in higher unrealized losses compared to the end of 2025. We have not recognized losses caused by interest rate volatility in the income statement for securities that we have no present intention to dispose of and we have the ability to hold these investments until maturity or a market price recovery. Elevated interest rates have also led to increases in net investment income as we are able to earn higher returns on our new fixed-maturity securities purchases and cash balances.

New life-licensed independent sales representatives decreased during the three and six months ended MarchJune 31,30, 2026 compared to the same periodperiods in 2025, largely due to the decline in new recruits in recent periods.periods as it typically takes around three months for an independent sales representative to obtain a life insurance license.

The number of life-licensed independent sales representatives decreasedas of June 30, 2026 was lower compared to December 31, 2025 as the number of new life-licensed representatives did not keep pace with the level of agent non-renewal and termination activity experienced during the first quartersix months of 2026, which was in line with historical trends.2026.

Term Life Insurance Product Sales and Face Amount In-Force.In-Force and Product Sales.

The face amount of term life insurance policies in-force decreased slightlyincreased for the three and six months ended MarchJune 31,30, 2026 primarily due to the translation impact onas the face amount ofissued our Canadian term life insurance in-force business duringexceeded the period. Newly issued term life insurance face amountsamount were largely offset by policy terminations during the three months ended March 31, 2026.terminated. Issued face amount decreased during the 2026 periodperiods compared to the same periodperiods in 2025 primarily due to the decrease in the number of new policies issued as discussed above.below. Policy terminations increasedalso decreased during the 2026 periodperiods compared to the same periodperiods in 20252025. butDuring werethe largely2026 consistentperiods, whenthe measured as a percentagestrengthening of beginningthe U.S. dollar in relation to the Canadian dollar unfavorably impacted the translated face amount in-force.in-force, whereas a stronger Canadian dollar relative to the U.S. dollar contributed to the increases in the face amount in-force in the 2025 periods.

Changes in Investment and Savings Product Sales, Asset Values and Accounts/Positions During the Three Months Ended MarchJune 31,30, 2026

Product sales. Investment and savings product sales increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 20252025. primarilyThe duegrowth toin sustainedproduct sales was driven by our clients’ strong demand for retirement savings products, positive investor sentimentsentiment, and the effect of enhanced product offerings we have rolled out in recent years. At a product level, managed accounts product sales increased, fueled by continued strength in investor demand for these products as well as the expansion of investment strategies offered on our advisory platform. U.S. retail mutual fund sales experienced strong growth that followedwas generallyalso strongboosted equityby marketfavorable performanceseasonal intrends 2024combined throughwith 2025sales andforce continuedinitiatives intoemphasizing the beginningbenefits of thelong-term first quarter of 2026.investing. In particular,addition, variable annuity product sales continued to grow as the guarantees offered by these products are more appealing to investors given strong equity market performance, expanded product offerings, and elevated interest rates. In addition, the increase in product sales for managed accounts resulted from continued strength in investor demand for these products as well as the expansion of investment strategies offered on our platform. U.S. retail mutual fund sales also continued to increase. These trends have been further aided by the growing population of investors who are reaching retirement age and seeking the protection provided by annuity products as well as the investment advisory services and broader products offered through our managed accounts investments program.products.

AverageRollforward of client asset values. AverageEnding client asset values increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended March 31,and 2025 primarily drivendue by the year-over-year cumulative effect ofto strong market performance andduring netboth client asset inflows.periods.

Average numberclient ofasset fee-generatingvalues. positions.Average Theclient averageasset numbervalues of fee-generating positions was higherincreased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily duedriven toby the continuedyear-over-year cumulative effect of retailstrong mutualmarket fundperformance salesand innet recentclient periodsasset that led to an increase in the number of retail mutual fund positions serviced on our transfer agent recordkeeping platform.inflows.

Capital Structure. Our financial results are affected by our capital structure, which includes our senior unsecured notes (the “Senior Notes”), a redundant reserve financing transaction, our Revolving Credit Facility, and our common stock. See our unaudited condensed consolidated balance sheetssheets, Note 11 (Debt), and Note 1112 (Stockholders’ Equity) to our unaudited condensed consolidated financial statements included elsewhere in this report and Note 12 (Debt) to our consolidated financial statements included in our 2025 Annual Report for more information on our capital structure.

Total revenues. Total revenues increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily due to increases inhigher commissions and fees earned in our Investment and Savings Products segmentsegment, investment gains and net investment income in our Corporate and Other Distributed Products segment, and net premiums in our Term Life Insurance segment. Further discussion related to revenue movements are discussed in detail in the Segment Results section below.

Total benefits and expenses. Total benefits and expenses increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 largely due to higher sales commissions in our Investment and Savings Products segment. Also contributing to the year-over-year increase were higher amortization of DAC in our Term Life Insurance segment. Insurance expenses and other operating expenses increased in the 2026 period compared to the 2025 period primarily due to an increase inhigher growth-related costscosts, employee compensation, and technology investments. The increases in total benefits and expenses were partially offset by lower benefits and claims (net of future policy benefits remeasurement (gain) loss) in our Term Life Insurance segment. Further discussion related to benefits and expenses movements are discussed in detail in the Segment Results section below.

Income taxes. The effective income tax rate was 22.7% for the six months ended June 30, 2026 compared to the effective income tax rate of 23.8% for the threesix months ended MarchJune 31,30, 20262025. wasThe largelydecrease consistent within the effective income tax rate ofduring 23.6%the for2026 period was primarily due to the same factor as described in the three monthsmonth ended March 31, 2025.comparison.

Net premiums. Direct premiums increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 largely due to the layering effect of new policy sales that contributed to growth in the in-force book of business compared to the prior year period. This increase was partially offset by an increase in ceded premiums, which includes $7.4$9.9 million in higher non-level YRT reinsurance ceded premiums as business not subject to the IPO coinsurance transactions ages, and was reduced by $2.9$1.0 million in lower coinsurance ceded premiums due to the run-off of business subject to the IPO coinsurance transactions.

Benefits and claims. Benefits and claims decreased modestly during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 despite the increase in net premiums. Higher ceded premiums for YRT reinsurance as noted above contributed to the lack of growthdecrease in benefits and claims expense. As the Company cedes higher premiums to YRT reinsurers, it also cedes higher future policy benefits reserves to the YRT reinsurers, which effectively offsets the net amount of benefits and claims expense recognized. Meanwhile, the overall year-over-year decrease in the net benefits and claims expense can be attributed to modest adjustments to claims estimates recognized in 2025.

Future policy benefits remeasurement (gain) loss. Future policy benefits remeasurement gain increaseddecreased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 and represents differences in experience variances that occurred in each period,period. primarilyThe future policy benefits remeasurement gains in both periods are largely from better mortality and lower reserves benefiting from elevated lapse experience compared to our future policy benefit reserve assumptions.

Amortization of DAC. Amortization of DAC increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily due to growth in the in-force book of business compared to the prior year period.

Commissions and fees. Commissions and fees increased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 primarily driven by higher asset-based and sales-based revenues. Higher asset-based revenues were driven by an increase in average client assets in the 2026 period compared to the same period in 2025 as well as a higher mix of assets under management that earn higher asset-based commissions, namely managed accounts and Canadian mutual funds sold under the principal distributor model. The increase in sales-based revenue was largely the result of strong growth in product sales for variable annuities and, to a lesser extent, U.S. retail mutual funds.funds and variable annuities.

Sales commissions. The increases in asset-based commissions and sales-based commissions for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025 were largely in line with the increases in asset-based revenues and sales-based revenues, respectively.

Other operating expenses. Other operating expenses for the three months ended MarchJune 31,30, 2026 increased compared to the three months ended MarchJune 31,30, 2025 largely due to higher employee compensation, variable growth-related costs, and continued investments in technology and infrastructure.costs.

Total revenues. Total revenues increased modestly during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.2025 primarily due to investment gains (losses) and net investment income. The increase in investment gains (losses) is largely due to more favorable market performance for equity securities in the 2026 period and $2.0 million of investment losses in the 2025 period related to the tender of bonds from a certain issuer that allowed us to reinvest the proceeds at current market interest rates rather than accept replacement bonds from the issuer at less favorable terms. Net investment income increased largely due to continued growth of the invested asset portfolio. Investment income net of investment expenses includes interest earned on our held-to-maturity asset, which is offset by interest expense on the surplus note (“Surplus Note”), thereby eliminating any impact on net investment income. Amounts recognized for each line item will remain offsetting and will fluctuate from period to period along with the principal amounts of the held-to-maturity asset and the Surplus Note based on the balance of reserves being contractually supported under a redundant reserve financing transaction used by Vidalia Re, Inc. (“Vidalia Re”). For more information on the Surplus Note, see Note 124 (DebtInvestments) to our consolidated financial statements in our 2025 Annual Report and Note 411 (InvestmentsDebt) to our unaudited condensed consolidated financial statements included elsewhere in this report.

Total benefits and expenses. Total benefits and expenses were largely consistentincreased during the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.2025 primarily due to increased professional fees and employee compensation.

We follow a conservative investment strategy designed to emphasize the preservation of our invested assets and provide adequate liquidity for the prompt payment of claims. To meet business needs and mitigate risks, our investment guidelines provide restrictions on our portfolio’s composition, including limits on asset type, per issuer limits, credit quality limits, portfolio duration, limits on the amount of investments in approved countries and permissible security types. We also manage and monitor our allocation of investments to limit the accumulation of any disproportionate concentrations of risk among industry sectors or issuer countries outside of the U.S. and Canada. In addition, as of MarchJune 31,30, 2026, we did not hold any country of issuer concentrations outside of the U.S. or Canada that represented more than 5% of the fair value of our available-for-sale invested asset portfolio or any industry concentrations of corporate bonds that represented more than 10% of the fair value of our available-for-sale invested asset portfolio.

Details on asset mix of fixed-maturity securities in our available-for-sale and trading securities investment portfolio (excluding short-term investments) were as follows:

The distribution of fixed-maturity securities in our available-for-sale and trading securities investment portfolio (excluding short-term investments) by rating were as follows: