Primerica (PRI) risk factors, FY2025 10-K

Risks Related to Our Distribution Structure

1. 01Our failure to continue to attract new recruits, retain independent sales representatives or license or maintain the licensing of independent sales representatives would materially adversely affect our business, financial condition and results of operations
2. 02A number of laws and regulations could apply to our independent contractor distribution model, which could require us to modify our distribution structure
3. 03There may be adverse tax, legal or financial consequences if the classification of the independent contractor sales representatives is changed21% rewritten
4. 04The Company’s or the independent sales representatives’ violation of, or non-compliance with, laws and regulations and related claims and proceedings could expose us to material liabilities45% rewritten
5. 05compliance 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 representativesNew

Risks Related to Our Insurance Business and Reinsurance

1. 06Our life insurance business may face significant losses or volatility if our actual experience differs from our expectations regarding mortality, reinsurance, persistency, or disability
2. 07Our life insurance business is highly regulated, and statutory and regulatory changes may materially adversely affect our business, financial condition and results of operations
3. 08A decline in the regulatory capital ratios of our insurance subsidiaries could result in increased scrutiny by insurance regulators and ratings agencies and have a material adverse effect on our business, financial condition and results of operations
4. 09A significant ratings downgrade by a ratings organization could materially adversely affect our business, financial condition and results of operations
5. 10If the rating agencies or regulators change their approach to financial strength ratings and statutory capital requirements, we may need to take action to maintain current ratings and capital adequacy ratios, which could have a material adverse effect on our business, financial condition and results of operations
6. 11The failure by any of our reinsurers or reserve financing counterparties to perform its obligations to us could have a material adverse effect on our business, financial condition and results of operations

Risks Related to Our Investment and Savings Products Business

1. 12If our relationship with one or more of the manufacturers of the funds and annuities we distribute or investment managers we make available is significantly altered or terminated or there is a shift in the business mix, our business, financial condition and results of operations could be materially adversely affected
2. 13In addition, we derive a growing portion of our earnings through our asset-based advisory platform. A shift in the business mix of new investments across our products and platforms could materially impact cash flows to our business, financial condition and results of operations
3. 14The Company’s or the securities-licensed independent sales representatives’ violations of, or non-compliance with, laws and regulations of the securities business could expose us to material liabilities44% rewritten
4. 15In 2022, in response to the regulatory 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 with two third-party mutual fund companies (the “Principal Distributor model”)New
5. 16If our suitability policies and procedures, or our policies and procedures for compliance with federal, state or provincial regulations governing standards of care, were deemed inadequate, it could have a material adverse effect on our business, financial condition and results of operations
6. 17Non-compliance with applicable regulations could lead to revocation of our subsidiary’s status as a non-bank custodian, which could have a material adverse effect on our business, financial condition and results of operations

Risks Related to Our Mortgage Brokerage Business

1. 18Licensing requirements will impact the size of the mortgage loan independent sales force, which could adversely affect our mortgage brokerage business40% rewritten
2. 19arrangements. Failure to comply with such disclosure requirements could result in regulatory sanctions, which could have an adverse effect on our ability to offer mortgage loan referrals in CanadaNew

Risks Related to Economic Downcycles, Public Health Crises or Catastrophes, and Disasters

1. 20The effects of economic downcycles, issues affecting the national, regional and/or global economy or geopolitical event(s), or any combination thereof, could impact the cost of living for our middle-income clients and could materially adversely affect our business, financial condition and results of operations
2. 21Major public health pandemics, epidemics or outbreaks (such as the COVID-19 pandemic) or other catastrophic events, have impacted and could again materially adversely impact our business, financial condition and results of operations
3. 22In the event of a disaster, our business continuity plan may not be sufficient, which could have a material adverse effect on our business, financial condition and results of operations20% rewritten

Risks Related to Information Technology and Cybersecurity

1. 23If one of our, or a third-party partner’s, significant information technology systems fails, if its security is compromised, or if the Internet becomes disabled or unavailable, our business, financial condition and results of operations may be materially adversely affected34% rewritten
2. 24Any failure to protect the confidentiality of client information could adversely affect our reputation and have a material adverse effect on our business, financial condition and results of operations
3. 25The current legislative and regulatory climate with regard to privacy and cybersecurity could adversely affect our business, financial condition, and results of operations
4. 26The development and use of artificial intelligence present risks and challenges that could materially adversely affect our business, financial condition and results of operationsNew
5. 27Credit deterioration in, and the effects of interest rate fluctuations on, our invested asset portfolio and other assets that are subject to changes in credit quality and interest rates could materially adversely affect our business, financial condition and results of operations24% rewritten
6. 28Valuation of our investments and the determination of expected credit losses when the fair value of our available-for-sale invested assets is below amortized cost are both based on estimates that may prove to be incorrect, which could adversely affect our financial condition and results of operations
7. 29Changes in accounting standards can be difficult to predict and could adversely impact how we record and report our financial condition and results of operations
8. 30The inability of our subsidiaries to pay dividends or make distributions or other payments to us in sufficient amounts would impede our ability to meet our obligations and return capital to our stockholders

Risks Related to Legislative and Regulatory Changes and Government Policy Uncertainty

1. 31Uncertainty in the legislative and regulatory climate with regard to financial services may adversely affect our business, financial condition, and results of operations50% rewritten
2. 32Activity by federal, state and provincial regulators relating to the possible impacts of climate change on companies and their constituents has resulted in heightened legislative and regulatory activity at the federal, state and provincial levelsNew
3. 33Litigation and regulatory investigations and actions may result in financial losses and harm our reputation
4. 34A significant change in the competitive environment in which we operate could negatively affect our ability to maintain or increase our market share and profitability
5. 35Primerica’s continued success requires a high-performing and stable team of employees across all levels, and the loss of key employees could negatively affect our financial condition and impair our ability to implement our business strategy63% rewritten
6. 36We may not be able to effectively execute our corporate strategy, which could have a material adverse effect on our business, financial condition and results of operations
7. 37We may be materially adversely affected by currency fluctuations in the United States dollar versus the Canadian dollar
8. 38The market price of our common stock may fluctuate