Good day. My name is Allison and I will be your conference operator today. At this time, I would like to welcome everyone to the Primerica Q1 2020 Earnings Results Conference Call. Thank you. At this time, I would like to turn the conference over to Nicole Russell, Senior Vice President of Investor Relations. You may begin your conference.

Thank you, Allison and good morning everyone. Welcome to Primerica’s first quarter earnings call. A copy of the press release, along with materials that are relevant to today’s call, are posted on the Investor Relations section of our website at investors.primerica.com. Joining our call today are our Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Alison Rand. Glenn and Alison will deliver prepared remarks and then we will open the call up for questions. During our call, some of our comments may contain forward-looking statements in accordance with the Safe Harbor provisions of the Securities Litigation Reform Act. The company does not assume any duty to update or revise these statements to reflect new information. We refer you to our most recent Form 10-K filing, as modified by subsequent 10-Q filings, for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied. We will also reference certain non-GAAP measures, which we believe provide additional insight into the company’s operations. Reconciliations of non-GAAP measures to their respective GAAP numbers are included at the end of the earnings press release and available on our Investor Relations website. I would now like to turn the call over to Glenn.

Thank you, Nicole, and thanks everyone for joining us today. I trust that all of you, your families, and your co-workers are safe and healthy as we all continue to navigate through the COVID-19 disruption. Today, Alison and I will provide a recap of our first quarter with comments on how the COVID-19 pandemic impacted these results. After this update, we will focus in more detail on how we are positioning our business to succeed during the stay-at-home orders and beyond by capitalizing on our unique strengths in adapting quickly to overcome obstacles. First quarter results were strong, driven by growing momentum during January, February, and the first half of March. While the emergence of the COVID-19 crisis in mid-March has brought about some significant changes to our business processes, the disruption occurred late in the quarter, resulting in minimal impact to many of our metrics. On Slide number 3 of the presentation, adjusted operating revenues were $541 million, up 10% compared to the first quarter of 2019, while adjusted net operating income was up 13%. Diluted adjusted operating income per share was $2.05, representing an 18% increase year-over-year, and ROAE was 21.8% compared to 20.3% in last year’s first quarter. On the capital deployment front, we repurchased $90 million of our common stock during the first quarter. Given the strength of our capital and liquidity position, which Alison will discuss later in the call, we believe we will meet our targeted repurchases for the year of $250 million. Turning to Slide 4, we ended the quarter with a total of 130,095 life-licensed representatives. Recruiting trends remain positive in the first quarter, boosted by independent business application fees discounted to $49 for the first 20 days of January and the last 11 days of March, which drove recruiting activity. We recruited a total of 84,762 new reps during the quarter, which represents a 34% increase compared to the first quarter of 2019. Licensing trends were also robust with an additional 10,599 new life licenses, a 5% increase compared to the same period last year. However, the stay-at-home orders did have a negative impact on the first quarter licensing totals due to the need to postpone live licensing preparation classes and testing providers closing their testing centers. During my comments on the longer-term COVID-19 impact, I will expand on this issue. On Slide 5, we see the result of our extraordinarily strong start to the year reflected in the numbers of policies issued. During the first quarter, we issued 71,318 new life insurance policies, an 11% improvement compared to the first quarter of 2019. Productivity at 0.18 policies per life insurance licensed representative per month improved noticeably compared to the 0.16 productivity rate in the first quarter of 2019. More importantly, the quarter also marks the reversal of the deceleration trend in productivity experienced over the last few years. Our Investments and Savings Product segment had another solid quarter. Results for this segment are highlighted on Slide 6. Record sales of $2.2 billion during the quarter increased 28% compared to the first quarter of 2019. Variable annuities remained the largest contributor to the year-over-year growth due to the attractive nature of living benefits and income guarantee features. Mutual funds and managed accounts also saw strong continued demand. Client asset values, which include approximately 75% equities and 25% fixed income ended the current quarter at $59 billion, down 7% year-over-year and down 16% compared to our all-time high of $70.5 billion set on December 31, 2019. The sharp decline in assets is due to the severe market correction that began in mid-February. Average client asset values, which more closely correlate to revenues, increased 8% to $66.6 billion year-over-year. During the quarter, net inflows were $543 million, reflecting strong year-over-year sales growth and redemptions that were in line with the growth in client asset values. We believe our redemption rate remains among the lowest in the industry. Now with the quarter behind us, let me share with you our plans to preserve our momentum during this health and economic disruption. Turning to Slide 7, our business is prepared for a range of crisis situations with robust business continuity plans that allow us to respond quickly and pivot to a remote work setting. Within a short period, we were able to successfully transition over 90% of our employees out of our home office buildings while implementing a significant health and safety protocol to protect those still working in our offices. In addition, we’ve continuously advised our sales force on appropriate safety precautions. As we built our business over the past 43 years, we’ve deliberately added capabilities, which both improved productivity and also offer optionality in the event of major marketplace changes. For example, prior to the emergence of COVID-19, 95% of business transactions were submitted and processed electronically from the point-of-sale, including applications for new recruits, life insurance, and investments. While our representatives traditionally completed the sales process in person, the turbo app technology we use allows for remote electronic signatures and remote delivery of all required disclosure documents. The digital transaction capability has been quickly combined with digital client interaction capability using web conference tools widely available to our sales force and clients. By using our digital transaction technology and interacting with clients digitally rather than in person, we’ve increased our remote recruiting and sales from about 5% of total prior to the stay-at-home orders to a point where the clear majority of interactions are being done remotely today. One of Primerica’s key advantages in leading our sales force is our communication system. During this crisis, we’ve expanded our technology to add significant web conferencing options to our broadcast TV, online, social media, and print communications. This combination has allowed us to provide direction and confidence to our sales force to keep them focused and active during this chaotic period. Our greatest strength, especially in times of disruption, is our sales force. As entrepreneurs, they are uniquely flexible, adaptable, and innovative. In addition, our leadership culture creates a natural reaction to crises that includes strong communication and clear direction. We’ve seen our sales force place top priority on the safety and health of their teams and their clients. They have also adapted to remote interaction capabilities for recruiting and training their teams while continuing to serve clients. Our business has historically been considered a face-to-face model. Today we see that, because of our field force, we can succeed as a remote model as well. While Primerica continues to succeed, we’ve adapted certain business processes to the current disruption. Let me provide a few examples. Unlike recruiting, where we have a significant degree of control, the licensing process relies heavily on third parties for testing and state or provincial agencies for licensing. Since most test centers are closed due to the pandemic, delays in the licensing timeline could result in recruits losing interest prior to completing the licensing process. We’ve taken a multi-faceted approach to dealing with this challenge. First, we extended and enhanced our field training bonus program, which encourages new recruits to begin the business-building process. Second, we’ve raised the profile of our non-licensed products so that recruits are more aware of options to earn income during the extended life licensing process. Third, because live licensing classes are now limited, we’ve expanded the reach of online offerings for licensing exam preparation. Finally, we’ve taken a leading role within the industry to request that states offer alternatives to the traditional licensing process, such as temporary licenses and remote testing options. We’re not yet in a position to predict the full impact of this crisis on the growth of our sales force. Recruiting is exceptionally strong, aided by special incentives; new licenses are being negatively impacted currently, and the long-term impact of new licensing alternatives is not yet known. For now, we are focused on keeping energy levels high and recruits engaged while keeping them focused on ultimately becoming permanently life-licensed. We are already developing our plan for dealing with the backlog of state and provincial exams that is building during the delay. COVID-19 is also impacting our issued life policy process. The traditional underwriting methods, which rely heavily on third parties for paramedical exams, have been scaled back. We are working on alternative solutions to help clients navigate through the process, such as having them complete paramedical exams at clinics rather than in-home. In addition, our rapidly underwritten life product, TermNow, can provide an appropriate solution for many clients. This product, which has been available since 2011, is a fully underwritten product that relies on database underwriting with the face amount limited to $300,000 or less. Historically, TermNow represented approximately 65% of U.S. policy sales volume. We’re seeing increased demand for this product with close to 75% of U.S. volume now being directed toward TermNow. We’re also assisting our existing policyholders who are experiencing financial hardship due to COVID-19. We work with these clients on the timing and frequency of premium payments to provide as much flexibility as possible. While many are able to find a premium payment plan that is convenient during the crisis, it is too early to know how persistency will be impacted. We are monitoring this situation closely. Now let’s take a moment to talk about the future. Our ability to quickly respond to the crisis has played an important role in sustaining momentum. Results so far in the second quarter suggest an approximately 8% quarterly increase in recruiting, as both second quarter periods benefited from the $49 discounted IBA fees and a 5% increase in policies issued year-over-year due to a strong start in April. High levels of field leadership engagement, strong field training activity of new recruits, and our ability to issue TermNow policies in spite of underwriting disruptions are contributing to sales strength. Our ISP business had a record first quarter, but we’ve begun to experience headwinds in April. We expect second quarter sales to be approximately 15% lower than second quarter 2019 as market disruptions continue to cause a headwind. Our reps have successfully transitioned to digital transactions combined with remote client interaction technology to serve their clients in our ISP business as well. As we look beyond the month of April, we believe we’re well positioned to withstand the temporary impact of the current disruption, although it is still too early to predict the full impact of a potential long-term economic downturn. We expect to refine our projections for recruiting in the size of our sales force as well as Term Life and investment sales once the economy reopens. While these are unquestionably difficult times for our clients, our sales force, and our home office employees, we remain steadfast in our mission to help middle-income families become properly protected and financially secure. The health and well-being of our people is our top priority. We are leveraging technology in new and innovative ways to reach clients and new recruits, and we’re making full use of our communication tools to keep the field informed and motivated. In these confusing times, clients’ needs for our products and services have never been greater. With that, I’ll now turn it over to Alison.

Thank you, Glenn, and good morning, everyone. Let me start by walking you through the quarter’s key earnings drivers by segment. As I do so, I will highlight where we have seen or expect to see an impact from COVID-19. I’ll follow this with a review of companywide operating expenses and will close with a discussion on our invested asset portfolio and our strong capital and liquidity position. Starting with Term Life on Slide 8, first quarter operating income before income taxes grew 18% year-over-year to $83 million, while operating revenues increased 10% to $328 million. Adjusted direct premiums grew 11%, driven by outperformance in issued life policies and strong policy persistency over the last several quarters. Benefits and claims were generally in line with the prior year and historical trends as with the benefit and claims ratio at 58.1%. The DAC amortization ratio at 15.8% was considerably lower than the prior year’s ratio with the main driver being persistency. As I discussed last quarter, during 2019, we saw persistency return to historical levels after a period of weakness in 2016 and ‘17. This trend continues in the first quarter of 2020 and was the largest contributor to Term Life margins increasing by 220 basis points over the prior year period. Turning to Slide 9, COVID-19 and its impact on mortality rates in the economy will likely affect the Term Life segment’s results as 2020 progresses. While we cannot predict precisely what will happen, the insights that follow should prove useful in formulating a range of outcomes. Glenn has already talked about the sales-related dynamics, so I will focus on lapses and mortality. The recent spike in unemployment could pressure disposable income for the middle-income market, potentially increasing lapses and leading to write-offs of both DAC and benefit reserves. Looking back at the Great Recession from 2007 to 2009, our lapses in the first two policy durations, where DAC is the largest, increased by about 10%, and for the next several durations by about 15%. With the favorable sentiment around owning life insurance given today’s circumstances, we believe an increase in lapses will likely be lower than what was experienced in 2009. As disclosed in our 10-K, if lapses increased by 10% across all policy durations, we estimate that DAC amortization will increase by $23 million and benefit reserve increases will be lower by $14 million for a net impact of $9 million on a full-year basis. As background for framing our COVID-19 mortality exposure, in 2019, our total claims paid were $1.4 billion. Given our extensive use of reinsurance, our net claims paid were about $180 million with an average net claim of $11,000. Our historical average issue age is 38. Therefore, our policyholders tend to be relatively young. At year-end 2019, only 1% of face amount in force was at an attained age of 70 or higher and 12% at 60 or higher. COVID-19 death rate predictions are evolving, and the estimates are varied. For demonstration purposes, let’s say there are 100,000 COVID-related deaths in the U.S. and Canada. For the total population of 357 million, this equates to an additional 275 deaths for 1 million people. Primerica insures approximately 5 million lives and our claims would increase commensurately without any regard to age distribution. We would expect about 1,375 additional COVID-related claims. Of our average net claim of $11,000, this would equate to about a $15 million increase in Term Life net claims. Through April, we’ve incurred an estimated $5 million of COVID-related claims, with a disproportionate share coming from New York. As we’ve shown in the past, our adjusted direct premium growth is highly predictable, and we do not believe a change in sales trajectory or lapses for the rest of 2020, especially given the strong results in the first quarter, will significantly reduce the ADP growth projection provided last quarter. However, given the level of uncertainty around lapses and mortality levels, we cannot predict what our Term Life margins will be for 2020 at this time. Turning next to the ISP segment on Slide 10, operating revenues increased 14% to $185 million, while income before taxes of $48 million grew 12% year-over-year. Sales-based revenue and commission expenses grew in line with the 20% increase in revenue-generating product sales, while asset-based revenues and expenses increased in line with the 8% growth in average client asset values. Given the timing of the market downturn in the quarter, the only notable impact on the segment’s financial results was an acceleration of Canadian segregated fund DAC amortization of about $2 million. While the first quarter’s average client asset values were $66.6 billion, client asset values at the end of the quarter were $59 billion, approximately 11% below the average. While asset values rebounded in April to an estimated $63 billion, the downturn will create headwinds in asset-based net revenues in the second quarter. Our financial supplement shows that asset-based net revenues defined as asset-based commissions and fees, less sales force commissions, third-party administrative and advisory fees, and segregated fund DAC amortization is about 5 basis points per quarter as a percentage of average client asset values. In other words, for every $1 billion change in average client asset values at today’s product mix, we’d expect to see a $500,000 quarterly or a $2 million annual change in asset-based net revenues. If client asset values stay at the current April levels for the remainder of the quarter, we’d expect second quarter asset-based net revenues to be about $1 million lower than the prior year’s second quarter. Similarly, our sales-based net revenue as a percentage of revenue-generating sales is about 1.3% at today’s sales mix. For every $100 million reduction in revenue-generating sales, we’d expect about a $1.3 million decline in net sales-based revenues during the period. Based on the 15% estimated year-over-year decline in second quarter sales that Glenn mentioned, we expect sales-based net revenues to be $2 million to $3 million lower than the prior year’s second quarter. Moving to our Corporate and Other Distributed Products segment, adjusted operating revenues declined by $2 million or 6%, and adjusted operating losses before taxes increased by $4 million to $20 million for the quarter. The lower revenues were almost entirely due to lower allocated net investment income as more NII was allocated to the Term Life segment to support growth in the block of business. The loss for the segment also increased due to a $1.5 million allowance for reinsurance benefits and claims on a discontinued line of business ceded in 1995 to a counterparty that was ordered into receivership this year. On Slide 11, consolidated insurance and other operating expenses were $115 million during the first quarter of 2020, representing a $5.5 million or 5% increase year-over-year. Approximately half of the increase was due to ongoing enhancements to technology-related capabilities. The remainder was due to growth in the business, including employee-related costs. At this point, we are moving forward with the business investments we described last quarter and are not revising our full-year 2020 expense forecast. Today, unforeseen operating expenses related to COVID-19, such as facilitating remote work plans, have been largely offset by reduced travel and other general operating expenses. We may incur lower third-party administrative and advisory fees, as factored into our net revenue ratios in our ISP segment. If economic conditions worsen, we will reevaluate our planned expenditures for the year and will provide a further update as necessary next quarter. Let’s move now to a review of our invested asset portfolio on Slide 12. Our focus on term insurance allows us to be less asset-intensive, and our ratio of invested assets in cash to adjusted equity as of March 31st was 2.5 times, much lower than others in the insurance industry. Cash flow testing does not generate any concerns under a wide range of stress tests due to our stable positive cash flows from the in-force life block, our low claims volatility from the extensive use of reinsurance, and the lack of cash values in our policies. Our invested asset portfolio remains diversified across industries and issuers with an average credit rating of A, duration of approximately 3.6 years, and only 3% exposure to below-investment-grade securities. Let me highlight a few industry sectors that have been under pressure in the current environment. We hold about $130 million or less than 6% of our portfolio in energy-related public corporate and private placement investments with an average rating of BBB and an average duration of about 4.8 years. We hold about $54 million or just over 2% of our portfolio in air transportation-related exposure, of which only about $4 million is in direct airline debt. These air transportation-related exposures have an average rating of A-minus and an average duration of 4.6 years. To frame the sensitivity of Primerica Life risk-based capital to ratings downgrade, we performed a hypothetical severe stress analysis assuming 15% of our A-rated bonds and 25% of our BBB-rated bonds are downgraded. The result was a decline of 15 basis points in our estimated RBC ratio from 430% to 415%, which is still well within our target range of low to mid-400%. As conditions evolve, we will continue to evaluate our portfolio for credit issues and review our exposure. We remain committed to maintaining a strong capital and liquidity position. Turning to Slide 13, liquidity at the holding company remains robust with invested assets and cash of about $270 million at March 31st. Additionally, we have full access to our $200 million revolving credit facility, although at this time, we do not foresee any need to draw on it. The holding company’s general operating expenses are modest at $7 million per quarter, including interest charges of approximately $4.5 million. While the headwinds facing our ISP segment will likely reduce the level of distributions to the holding company moving forward, strong dividend generation at Primerica Life gives us confidence that our capital and liquidity will remain more than adequate to meet our operating needs and capital deployment plans. We remain committed to our dividend, which at the current rate requires approximately $60 million per quarter, as well as completing our planned share repurchases of $250 million, $90 million of which was completed at March 31st. With that, I will turn the line over to questions.

Thank you. Our first question today will come from Andrew Kligerman of Credit Suisse. Please go ahead.

Hey. Good morning. Good morning and thanks for the very comprehensive presentation. I guess, the first question is that you say you remain committed to share repurchases. You’ve got a full year target of $250 million, so it would kind of be the normal course of business. Even though it’s not normal, you’re going to act as you would in any year with regard to your share repurchase authorization. Is that the right way to think about it?

Yes. And we obviously gave that quite a bit of consideration as we look at our capital position and our ability to continue to generate capital out of Primerica Life. One of the benefits we’ve always talked about with our life insurance business is how stable and predictable it is and how strong the cash flows coming out of that business are. We do feel that given that ability, we have more than sufficient capital and liquidity to continue with our plan. I will tell you that, as of now, we have already completed half of that plan. And so, we’ve got about $125 million left to go for the remainder of the year.

Excellent. Very, very helpful. Now, it’s interesting to see that your recruits were up a robust 34% year-over-year. And as part of that, the incentive was, I think, to cut the fees to join in half. And I recall you did that about a year and a half ago, and some of those recruits did not have the caliber that you were looking for, they weren’t productive and they didn’t stay on. So what gives you the confidence that this new crop might be different than what we saw some time back?

Yes, we analyze the impact of each incentive we implement. Back in 2011, we saw a significant increase in recruitment following a convention with a reduced $49 IBA fee, but we were disappointed by the results. Afterward, we improved our licensing process. At the last convention in late June and early July 2019, we noticed a much better pull-through rate. I wouldn’t say the quality of recruits was lower; rather, their commitment level was less. Lower fees can lead to less commitment to following through, which is vital for our business. That convention yielded good results in the latter half of the year, and I was pleased with how 2020 began. We noticed a shift in momentum at the end of 2019, particularly in January, February, and early March. Before the current challenges emerged, we planned a special promotion at the start of the year, reducing the fee from $99 to $49. This minor adjustment sparked considerable excitement, especially when paired with enhancements to our field training bonus. We initiated this promotion early in the year, thinking it would be our only one during 2020. However, as the stay-at-home orders began, we realized this was a reliable way to generate excitement and activity, so we extended it for the last 11 days of March. This approach generated significant interest. Fortunately, we adapted to doing business remotely, which added an interesting twist, but we found success with it. We closely monitor the pull-through rate, although extended licensing times due to closed testing centers and the inability to conduct live classes complicate things. We're facing challenges, and it's hard to predict the outcomes, but we believe that having this activity and these recruits is essential to maintaining momentum. In February, for instance, we experienced a 23% growth in recruits without any incentives. This added to our existing momentum at the start and end of the quarter.

I see. That’s very helpful. It seems like your representatives are quite adept at using technology, which is reflected in your guidance that ISP sales are only down 15%. I understand there is also a licensing issue at play. Is it possible that we might see Term Life sales decline within a similar range?

I believe that the changes in ISP sales are primarily due to market disruption. Sales are declining because of uncertainty in the market, and pressure on disposable income also affects sales to some degree. People are generally more inclined to take a wait-and-see approach during these volatile market times. The factors influencing our ISP business differ from those affecting our Term Life Insurance business. On the Term Life side, as Alison mentioned, we're seeing clients who are more receptive to discussions about protecting their families, likely reflecting a heightened awareness of mortality during this period. Regarding technology, people often overlook how integral it is to Primerica. We've been pursuing a strong technology strategy for many years, enabling 95% of our transactions to occur digitally from clients' homes. Importantly, this can be done on devices that clients already own, eliminating the need for specific hardware or training. If someone has a smartphone when they join Primerica, they can simply download our app and start transacting right away. What's remarkable is how quickly our sales force adapted to remote digital interactions using web conferencing technology like Zoom. Though we had a foundational use of it, the rapid shift to replace face-to-face meetings was impressive. This adaptability is benefitting our business and recruiting efforts. It also supports our life insurance sales, fueled by the ongoing health crisis, while simultaneously helping our ISP sales despite the challenges posed by market disruptions.

Excellent, thanks very much.

Our next question today will come from Dan Bergman of Citi. Please go ahead.

Good morning. I have a high-level question. If we enter a prolonged period of higher unemployment and slowing GDP growth, what impact do you anticipate on your sales force growth over time? Given that most of your sales reps are part-time and commission-based, do you think this environment would be a net positive or negative? Your thoughts would be appreciated.

Yes. Traditionally, we view that, Dan, especially a long-term downturn as a net negative. There are positives and negatives to both types of environments. I believe it was on the last quarterly call, we had a conversation; was the unemployment rate so low and employment so high, it was beginning to impede our recruiting. We’ve always felt like a strong economy was better for recruiting and for all of our business than a weak economy. But even in times of weakness, there are people who still have the flexibility to start a part-time business and do that because they’re unhappy with their employment situation. But overall, taking all into consideration, we would say that a long-term downturn generally creates a drag on recruiting and licensing in the size of the sales force. So, as we look forward without any ability to predict how quickly it is, is it a V-shaped recovery, an L-shaped recovery, who knows at this point? That’s something that we’ll be monitoring and trying to revise our thoughts on that as we see both the kind of depth and breadth of the economic downturn.

Got it. That’s very helpful. I wanted to explore the lifestyles segment and see if you can share insights on the factors driving the rebound and the average agent productivity for the quarter. I'm curious whether we should view this as a natural return to the mean after a period of slightly weaker results. How much did the stronger recruiting performance in the quarter contribute to this, and what other factors might have influenced it? Any insights you can provide would be appreciated.

Okay. Well, as we said, we had a very strong quarter, and very little of that was impacted by the disruption at the very end of March. We’ve been working very hard for the last couple of years on regaining the kind of momentum that we had years prior to that, and it’s more of a natural cycle of our business. We go through periods of extremely strong momentum and then we go through frustrating periods of plateau. We really felt like we had some true strength in our business that was reflected in December, January, and February, and the first half of March, which by the way, I think was a significant help in getting us into this period of disruption on a positive footing. I think we had a lot of the right ingredients for better momentum overall. It’s not just the normal return to the median but some real growth trajectory in our business that I was very excited about. Of course, all of that is brought in the question because we don’t know exactly how we come out the other end of this, but clearly that was helpful getting us a good start into what we saw in the last couple of weeks of March and the results that we’ve experienced in April. So, I think it was more than just a return to the mean or the media. I think we did have significant recruiting growth. It was coming through in strong licensing, which kind of got nipped a little bit at the very end because of the closing of test centers and so forth, but it was strong. Life productivity overall was strong and investments productivity was strong. So, I believe we’re actually seeing the results of our hard work in the first quarter. Certainly rather start the disruptive period from there than being flat or down. But just exactly how long all of this chaos goes on will determine how much momentum we’re able to sustain and for how long.

Got it. Very, very helpful. Appreciate your taking the question.

Our next question will come from Ryan Krueger with KBW. Please go ahead.

Hey, good morning. Just hoping you could provide some additional color on the licensing process at this point. I guess, is it possible for new agents to get licensed at all at this point, or is it completely dependent on things reopening?

It really depends on the state or province and the options available. Currently, our primary focus for licensing is getting our recruits into live classes, which are not happening right now since they have all transitioned online. We are seeing good participation in these online classes, but it's unclear how effective they are compared to live sessions. Historically, live classes have been more effective, although both options are available and utilized. We can still prepare recruits for the exam, but very few states or provinces are currently offering exams. Exams are typically provided by third-party vendors, and none are administering them at the moment. Some have indicated they might reopen in May, while others are considering the end of May. We're preparing as many people as possible, and some are already reserving exam dates to avoid being overwhelmed when testing resumes. These testing providers cater to various professions, not just insurance, and will likely experience backlogs upon reopening. We're making efforts to ensure our recruits are prioritized. We are also exploring alternative solutions. A number of states—over half—are now providing temporary licenses, which allow individuals to meet requirements without having tested yet, with the understanding that testing will occur later. While this is better than nothing, its long-term effectiveness is uncertain and may be temporary until the COVID crisis abates. We don't view this as a permanent change to the licensing process. On another note, remote testing is gaining traction, with some states and FINRA adopting it for securities. This method enables applicants to take exams from home under proctoring, providing a more convenient and flexible scheduling option. A few states have already resumed live testing. We are exploring all these pathways because our goal is not only to recruit individuals but also to guide them through the licensing process to expand our sales force. We're doing everything we can to ensure the highest number of recruits become licensed.

Thanks. And then, on persistency, have you seen any impact so far in April, or is it just too early to tell at this point?

We obviously took a hard look at April. I do believe it will be too early to tell. That being said, what we have seen is the continuing favorable trends we were seeing in the first quarter and the fourth quarter of last year. So, at least through April, we have not seen any deterioration, and in fact we’re moving in a very positive direction. I do expect, as the quarter continues, to start seeing more lapsation just purely because of the economy.

Our next question will come from Mark Hughes of SunTrust. Please go ahead.

Good morning. The YRT premium, how does that impact your COVID claims? And then, the $5 million that you cite from New York, is that incremental, would you say, to what would normally be the underlying ratio or is that already factored in?

Okay. So two things. Whenever I talk about a net claim, that is factoring in the reinsurance recovery. So, in the case of the YRT then, 90% recovery, to the extent that policy was subject to YRT, which virtually all of them are. In addition, it would also cover any coinsurance coverage on the IPO-related coinsurance to the extent the policy was written prior to 2010. So, I hope that answers the first question. On the second one, just to clarify one thing, I’d say there is a disproportionate amount of the $5 million coming from New York, but certainly not all of that is coming from New York. The $5 million is the net estimated incurred exposure related to COVID-19. So, it includes things that are in the door that have been reported that we haven’t obviously received full death certificates for, and we’re still vetting to make sure they weren’t, in fact, COVID-related, and then also things that we would get into the technical terms incurred but not reported IBNR; our estimate of IBNR through the end of April. So that is also a net number. That is not the gross amount we’d be paying the policyholders or the beneficiaries of the policies. It’s, in fact, the net amount we’re exposed to after reinsurance.

Can you tell me if you have observed an increase in mortality due to the additional COVID claims? Are you indicating that these specific cases are related to COVID? If so, I believe you mentioned that there has been an increase in overall mortality?

Yes. And actually, just to clarify, the $5 million on discussing is what we would consider a bump from normal mortality levels. We believe it’s related to COVID-19.

Okay. And then, on the recruits, how much has the lockdown been a motivation? If people have some time on their hands, this could be a good productive thing to do in addition to the incentives you’ve offered.

Yes, like many aspects of Primerica, determining the cause and effect can be interesting. There's always a mix of positives and negatives in any situation. I would say that the lockdown has had a positive impact as reported by our sales force, with people being more available and more likely to engage in conversations. Many are missing these interactions, and the acceptance of Zoom invitations for discussions is likely higher than our usual recruiting interactions were prior to this. There’s clearly a positive aspect to that. However, we need to be cautious about how long this change in behavior will last after the lockdowns end. For now, we are also seeing increased interest in discussions about life insurance, suggesting that both our opportunity and life insurance talks have benefited from people pausing and having some free time without many alternatives. We appreciate this moment. While we can’t predict the future, we felt the incentives were a positive move. The combination of these factors has been strong enough to mitigate some of the usual challenges associated with adapting to new technology that often disrupts momentum. So far, the positives have outweighed those challenges. As things begin to normalize, we will evaluate what we’ve learned about new techniques. We aim to see if we can blend our traditionally face-to-face business, which has been about 90% in-person, with remote interactions after this period. This has been an exceptional learning opportunity, and we have many things to explore moving forward.

I apologize if I'm misunderstanding this. Regarding the $5 million, was any part of that included in the expenses for the first quarter, or is it all for the second quarter?

That’s all 2Q.

And then, one final question. The additional sales to existing customers, I think you kind of restated your some of those numbers is a small amount. But what was the change there?

We always considered it an estimate; it wasn’t an actual P&L number. We have consistently stated it was an estimated figure. We have drawn more attention to it recently. After reviewing, we identified some inconsistencies in how we were conducting business in Canada compared to the U.S., which led us to restate all of those numbers. The historical restatement is available on Page 3 of the financial supplement. This does not affect the trends we previously discussed; it only slightly alters the overall amount.

And our next question will come from Jeff Schmitt of William Blair. Please go ahead.

Hi, good morning. I have a question about ISP sales. They were significantly high, especially compared to a tough Q1 last year. With the market decline, we saw increased inflows and a surge in product sales since there weren’t really any employment issues initially. Now, however, you’re anticipating a substantial drop as unemployment rises. I’m trying to understand if this could be a factor impacting product sales. If unemployment remains high, should we expect weak product sales in the coming year?

Yes, Jeff, I think you're identifying some factors that influence our sales, although they might be in the reverse order. It’s clear that sustained unemployment negatively impacts sales. However, what we've observed in our business, and historically experienced, is that short-term disruptions often do not show up significantly in Primerica's numbers. Many times, we may face one to three weeks of market disruption that is hardly noticeable in our sales figures. As market uncertainty persists, particularly during prolonged downturns, investors at Primerica, like elsewhere, tend to remain cautious. A market decline doesn’t necessarily translate into an immediate buying opportunity that would boost sales. Initially, it might be disregarded. However, as it continues, it becomes more likely that our clients, and I believe others too, will hold back on investing to await some clarity in the market. I think this hesitation would be intensified by prolonged unemployment. Therefore, the speed of economic recovery is crucial. However, currently, it seems more influenced by market factors rather than unemployment and disposable income, although both can weigh heavily over time. As we observe how long it takes for the economy to recover, we will gain a clearer understanding of what the future may hold beyond the second quarter.

Okay. That makes sense. And then, you may have touched on this, but just thinking about the productivity and the number of policies issued, are there any headwinds there for, I mean, people needing a physical exam and they just can’t go in to a doctor to get one?

Yes. We saw that early. In fact, that was one of the things that both licensing and the dilemma that you just described were the first two kind of things that emerged as challenges to our ability to do business. We talked about licensing already. But fortunately, we found a couple of workarounds that reserved a lot of the momentum on the life side. The first thing is that while the paramed companies, many of them stopped doing in-home paramedics, some of the networks actually have clinics across the U.S. For whatever reason, clients were more comfortable going to a clinic and having their paramedic done. We even heard of a paramedic that will come outside the clinic and actually do it at your car, and so they, of course, are working on their optionality as well. We still have some paramedic exams being done in homes, which at the beginning we thought that might be zero, but there are some of those being done. Today, we’re getting completed about 70% of the paramedics that are our normal run rate, which is much higher than I would have anticipated when this first began. The good news, as I mentioned in my comments, is that we have our TermNow rapidly underwritten product, that’s fully underwritten but it’s done rapidly through database underwriting, which oftentimes does not require, in fact usually does not require a paramedic. And of course, it is limited to a $300,000 maximum face amount. There are some good sense limitations on it, but it’s a great way to get fully underwritten coverage in place for clients and it may be necessary, perhaps not enough coverage to come back later and complete the underwriting process once the doors are open and add to the policy. But it means that sales are being made now that otherwise, and I think some of the companies are not being made right now. That’s why I mentioned that traditionally, in the U.S., 65% of our apps have been TermNow. The other 30% have been our custom advantage traditionally underwritten product. That TermNow percentage in the U.S. is up to right at 70% or maybe just a tick higher. We are seeing some of that void being filled by the TermNow product, and we’re seeing an amazing number of paramedics completing in spite of the disruption. I don’t think that is going to be a major impact or has it been thus far, let’s say that, on productivity. It’s interesting, in the way our productivity is calculated, just simply dividing our sales force size into the number of applications. As we have a slowdown in new licenses, that’s likely to slow down the sales force growth, so you’re probably just because of the math going to see productivity pressure up because the sales force has kind of locked in place, and we’ve got good momentum and sales.

Got it, okay that’s helpful. Thank you.

Ladies and gentlemen, this will conclude the question and answer session. And also concludes Primerica’s first quarter, 2020 results conference call. We thank you for attending today’s presentation. And you may now disconnect your lines.