Hello everyone and welcome to Primerica’s Second Quarter 2022 Earnings Webcast. My name is Charlie and I will be coordinating the call today. You'll have the opportunity to ask a question at the end of the presentation. I’ll hand over to your host, Nicole Russell, Head of Investor Relations to begin. Nicole, please go ahead.

Thank you, Charlie, and good morning, everyone. Welcome to Primerica's second quarter earnings call. A copy of our earnings press release, along with materials that are relevant to today's call, are posted on the Investor Relations section of our website. Joining our call today are Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Alison Rand. Glenn and Alison will deliver prepared remarks, and then we will open the call up for questions. During our call, some of our comments may contain forward-looking statements in accordance with the Safe Harbor Provisions of the Securities Litigation Reform Act. The company assumes no obligation to update these statements to reflect new information. We refer you to our most recent Form 10-K filings as well as modified by subsequent Form 10-Q for a list of risks and uncertainties that could result in 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 our press release and are available on our Investor Relations website. I would now like to turn the call over to Glenn.

Thank you, Nicole, and thanks everyone for joining us today. The second quarter reinforced that we're moving beyond the influence of the pandemic and seeing the fundamental strength of our business in action. The complimentary nature of our Term Life and ISP businesses continues to deliver important financial solutions to middle-income families. Starting on Slide 3, adjusted operating revenues of $672 million increased 3% year-over-year, while diluted adjusted operating income per share of $2.86 declined 12%. ROAE was 22.5% for the quarter. To assess the underlying strength of the second quarter results, we have to look through a number of distortions that made year-over-year comparisons difficult. First, last year's Term Life results were heavily impacted by COVID, with sales and persistency benefits exceeding the higher death claims incurred. Second, the equity market has completely reversed its momentum. The S&P 500 Index was up 8% in the second quarter of 2021 versus down 16% in the current period. Finally, the e-Telequote acquisition wasn't completed until July 1 of last year, which means financial results in the current period have no comparable offset in the prior year period. It's important to look beyond these factors to understand and assess the health of our core business. As such, I will focus my prepared remarks today on the clear growth path we see taking shape in the second half of this year. Term Life, our largest segment continues to provide a reliable source of earnings. Since the start of the pandemic, our enforce book has increased at a compounded annual growth rate of 5% versus our historical 3.5% growth rate, and we reached a total of $914 billion of face amount in force by the end of June. The accelerated growth was fueled by a combination of higher sales and higher face amounts for policies issued, a trend that continues today. We believe the in-force block will continue to grow as we steadily layer on new insurance policies every year, creating a predictable source of recurring premiums. Our practice of reinsuring approximately 90% of our mortality risk further insulates our business from volatility and allows us to largely lock in profitability. Focusing on the Term Life segment on Slide 4, we issued approximately 77,000 new Term Life policies during the quarter. We believe third and fourth quarter sales will outpace our pre-pandemic results while also exceeding their prior period comparisons. We project second-half sales will increase around 4% to 5% year-over-year. We expect our Term Life business to remain the primary source of deployable capital, which we plan to use to fund our growth while also providing an attractive return to investors through quarterly dividends and share buybacks. While earnings in the Term Life segment are steady and predictable, our investment and savings business is highly correlated to the equity markets and the second quarter certainly demonstrated how quickly momentum can shift. Looking past the market noise to focus on the core business, you'll find a model built on strong fundamentals and rooted in our long-term systematic approach to investing. Every day, our licensed representatives interact with clients to help them meet their financial goals, which most often include planning for retirement. Approximately 70% of our total client asset values are invested in retirement accounts, and almost 20% of all mutual fund sales are funded through automatic monthly investments. This focus on the future also results in lower redemption rates as clients stay invested despite market volatility, leading to a stickier asset base for Primerica. Looking at our second quarter ISP results on Slide 5, high inflation, low consumer confidence, and fears of a recession dominated the headlines during the quarter, creating significant headwinds for our ISP business. While sales had remained fairly strong earlier this year, the continued volatility and sharp decline in equity markets has impacted second-quarter sales. Today, total second-quarter sales were lower than expected at $2.7 billion, although net flows of nearly $900 million continue to reflect our clients' buy-and-hold long-term approach to investing. Assuming this uncertainty and volatility continues, our best estimate for third quarter ISP sales is a decline in the mid-20% range with some upside if markets improve. While we expect full-year sales to decline compared to last year's record results, it's worth noting that 2022 results are still expected to exceed pre-pandemic levels. Turning next to more recent business ventures, our US mortgage business is experiencing growth challenges along with the broader industry due to the rapid rise in interest rates and a slowing economy. In the second quarter, sales volume declined by nearly 50% compared to the second quarter of 2021, resulting in a cumulative year-to-date decline of about 30%. This has not altered our views on the long-term prospects of this business or deterred us from actively working to expand the number of states in which we are licensed to offer mortgages as well as the number of mortgage licensed representatives at Primerica. We're also working to educate mortgage licensed representatives on how to identify opportunities to consolidate variable interest rate consumer debt, build households with cash flow, and capitalize on purchase money mortgage opportunities. On Slide 6, we recognize that our newly acquired senior health business has not performed as we originally expected. We remain committed to driving a turnaround by carefully managing sales volume as we work toward a sustainable ratio of revenue to acquisition cost. We have deliberately limited the growth of licensed health agents and made tough decisions with respect to certain of these agents who are not profitable based on reduced levels of LTV. We are focused on ensuring unit economics are headed in the right direction before we grow our licensed health agent sales force at e-TeleQuote. Acquisition costs, while seasonably high relative to LTV in the second and third quarters of every year, continue to trend down on a net basis as we make progress on increasing our sales conversion and as a result, reducing both lead and labor costs per sale. We anticipate instituting a new health agent compensation model in the third quarter that is intended to drive agent productivity and profitable unit economics. Using Primerica's strength in distribution provides a real advantage that our senior health competitors cannot duplicate, while it's still early, referrals from Primerica representatives are outperforming leads from traditional sources and we've already seen higher conversion rates from these leads. We believe the warm relationship with our representatives will also lead to longer retention and higher LTVs based on early indications of the quality of business referred from Primerica to e-TeleQuote. The number of senior health certified representatives entering the AEP this fall will be significantly higher than last year, and we are optimistic about the volume and quality of leads Primerica's field can generate during the upcoming Medicare annual enrollment period. We made the decision to exercise our call option in early July to acquire the remaining 20% of Primerica. Given the results of the trailing 12-month period, the contractual formula price defined in the Shareholder's Agreement for the exercise of the call option was $0, and the remaining stake in the shares was acquired at no cost. Turning to Slide 7, recruiting remained strong compared to historical averages. Recall that we made liberal use of recruiting incentives through most of last year, which increased recruiting. In the first half of 2022, we returned to a more fundamental approach with fewer incentives and have seen sustained strength in recruiting with levels comparable to pre-pandemic results. This steady improvement in recruiting over the multiple recent quarters confirms the overall strength of our message and affirms that potential new recruits are attracted to our business model. The recent changes in labor markets and the desire for more independence and flexibility further reinforce the attractiveness of building a Primerica business. We believe we have the infrastructure and processes in place to pull new recruits through the licensing process, and we leveraged the power of our convention in July to launch new incentives to drive recruiting to new heights. We're already experiencing a strong response to these incentives and believe third-quarter recruiting will be extraordinarily strong. Turning next to licensing; a total of 11,529 new life licenses were issued during the current quarter as momentum accelerates. To put this figure in proper context, licensing grew 14% compared to the second quarter of 2021, a period which included more than 2,000 COVID temporary licenses, the majority of which never converted to a permanent license. Compared to the pre-pandemic second quarter of 2019, licensing grew by nearly 6%. As I mentioned earlier, we're seeing a clear benefit from our collective efforts over the last few years to improve our licensing process and the introduction of new progress tracking tools that allow our field to keep new recruits accountable in real time. New recruits are also more comfortable in in-person classes as we continue to move further away from the COVID-related shutdowns and restrictions. To maintain our momentum, we're actively adding pre-licensing coaches and classroom sites to accommodate this increase in attendance. Our message to the field over the last 12 months has emphasized the power of the combination of recruiting and licensing, and our most recent quarter clearly demonstrated their buy-in. The ongoing strength in recruiting along with the more robust licensing process has led to a 2% increase in the size of our sales force year-to-date and helped propel the Primerica sales force to over 132,000 licensed representatives at the end of June. Based on current trends, we expect the size of our sales force can approach 134,000 by year-end. Now, let's review the impact of our convention, which took place at the Mercedes-Benz stadium in Atlanta, between June 29 and July 2. As you know, we leveraged the power of this event to deliver a focused, consistent message simultaneously to a large number of people and to cast a vision for the future. The convention can also act as a momentum accelerator by re-energizing our sales force. We are pleased with the attendance of nearly 35,000 people at the event; although attendance was down from 2019 due to lingering COVID concerns, travel restrictions, and flight disruptions that are currently overwhelming the airlines. What is most important is that we delivered on our goal to put the pandemic behind us and shift our focus to the future. Preparation for this event begins by identifying the desired outcomes and defining appropriate messages. This year's message was focused on our unique ability to serve the middle market, the attractiveness of our business model, and the importance of growing our licensed sales force through both recruiting and licensing. The convention also featured an exhibit hall where participants were able to engage with our business partners and home office staff to learn about the most recent initiatives, obtain new product information training, and participate in demonstrations of our latest technology and tools. Convention attendees could also register for upcoming training and sign up for various portals and newsletters. Over the four days of the convention, many participants also took advantage of onsite senior health certification at the senior health booth. As we look to the future, we do so with more confidence than ever, knowing that we have the right systems in place and support needed for our representatives to succeed. The recruiting incentives that were announced on July 2 have filled the licensing pipeline, and these new recruits will continue to fuel growth in sales momentum. We're excited to see results emerge over the next few quarters and into 2023.

Thank you, Glenn and good morning, everyone. Let me start by walking you through the key earnings drivers by segment highlighting how each business has responded to the changing dynamics around COVID, market conditions, and the economy. Starting with Term Life on Slide 8, operating revenues of $411 million increased 7% year-over-year driven by an 8% increase in adjusted direct premium. Pre-tax income growth was compressed to 3% due largely to insurance expenses that have been temporarily elevated in the first half of the year. While the changing dynamics around COVID have shifted benefits and claims ratios considerably year-over-year, the resulting Term Life operating margin was strong at 21% for the quarter. Looking a little more closely at pre-licensing, we continue to see policy retention normalize as COVID fear subsides. The lapse rate for policies issued during 2020 and 2021 is about 15% and 5% higher respectively than our pre-pandemic experience by duration. This is not surprising as these policies were issued during the height of pandemic fear. By contrast, we continue to see strong persistency on policies issued prior to the pandemic with lapses around 10% lower than pre-pandemic levels. Lapses across all durations have picked up modestly from the prior quarter, which may indicate that inflation is emerging as a headwind. However, we have not seen a reduction in average policy size or average premiums, which supports the notion that our market continues to prioritize financial protection when allocating their wallet share. We will monitor these trends as time progresses, but as of now, our current lapses remain modestly favorable to pre-pandemic levels. The DAC amortization ratio, which is seasonally low in the second quarter, is 14.6%, which is consistent with pre-pandemic second quarter levels. Shifting to mortality, COVID claims continue to subside and were $2 million net of reinsurance for the quarter. Barring any unusual changes in COVID status, we expect this level of COVID claims to continue in the third quarter. We also saw non-COVID claims of about $5 million below historical trends. Much of this is likely regular claims volatility, but we will monitor trends to see if a post-COVID improvement in mortality is emerging. Overall, the benefits and claims ratio was 58.5% during the quarter. Insurance expenses were higher than normal in the second quarter, as we added the biennial convention, which was postponed from last year due to COVID to our normal schedule of salesforce leadership events. Even so, the insurance expense ratio of 8% was in line with pre-COVID second quarter levels, and we expect the ratio to come down in the second half of the year. Outlook to the third quarter, we expect persistency trends to put some pressure on adjusted direct premiums with growth of approximately 7% year-over-year. Any favorable impact on adjusted direct premiums from rising sales levels that Glenn discussed will take some time to build. The benefits and claims ratio is expected to be in the low 59% range, and the DAC ratio should continue to trend in line with pre-pandemic third quarter levels. All in, we expect the Term Life margin to be around 20% for the third quarter. Turning next to our investment and saving product segment on Slide 9, our investment business is highly correlated to the equity market. The rapid pace of market depreciation in the current period versus significant market appreciation in last year's second quarter had a major impact on our year-over-year results. Operating revenues of $222 million decreased 7% year-over-year. This combined with higher Canadian segregated fund DAC amortization elevated operating expenses due to Salesforce leadership events and a normalization of operating leverage from the very strong levels last year, led to a 17% decline in pre-tax income to $59 million for the quarter. Sales-based revenues and sales-based commissions declined 15% and 14% respectively, in line with the change in revenue-generating sales. Asset-based revenues remain largely unchanged compared to the prior year period as average client asset values declined 2% to $88 billion. A drop in asset values supporting our Canadian segregated funds accelerated DAC amortization during the period, creating roughly a $4 million disparity in the year-over-year results. Market volatility may continue to create noise in year-over-year comparisons on DAC amortization. As we look to the third quarter, if markets remain where they are now, we expect asset-based net revenues to decline about $3 million, and sales-based net revenues to decline about $10 million year-over-year. Turning to the Senior Health segment on Slide 10, we've continued to refine our approach for estimating lifetime revenues and believe the LPDs determined by our algorithms this quarter reasonably reflect current persistency. The refinement applies to projections for policies sold during the most recent AEP and OEP, which accounts for much of the $5.4 million negative tail revenue adjustment this quarter. We do not expect significant negative tail adjustments in the third quarter. As Glenn noted, we are taking steps to improve LTDs and reduce contract acquisition costs, and we believe that business sourced through Primerica agents can be a key differentiator for our business. Our pre-tax loss estimate for the full year remains unchanged at around $35 million with a loss expected in the third quarter and a small profit in the fourth quarter during AEP. Funding required to support the business should be less than $10 million for the year, including the tax benefits recognized at the PRI level. In our corporate and other distributed product segment, the $5 million year-over-year increase in pre-tax operating losses was driven by higher insurance and other operating expenses, as well as lower segment net investment income as the allocation to Term Life increased to support growth in that business. Consolidated insurance and other operating expenses on Slide 11 increased $25.6 million or 23% year-over-year. Roughly 7.5% or $8.5 million of the increase comes from the senior health segment, which did not exist in the prior year period. Another 7% or $8 million is due to higher costs associated with the in-person salesforce leadership event that we scheduled by our biennial convention, which added an event to our regular calendar and higher travel in general. The remainder of the increase is generally driven by growth in the business, employee compensation, and technology. Looking ahead, we expect insurance and other operating expenses to grow at more normalized levels as the temporary increase in expenses associated with field leadership events is behind us and senior health expenses will be reflected in the probable period. On a year-over-year basis, third and fourth quarter insurance and other operating expenses are expected to increase by about 8% and 6% respectively. Turning next to Slide 12, our investment asset portfolio remains well diversified with an average rating of A and a duration of 4.8 years. The significant increase in interest rates over the past few months has pressured fixed income prices. Our portfolio ended the period with an unrealized loss of $223 million compared to an unrealized loss of $84 million at the end of March. We believe these valuations are significantly tied to interest rates and not credit concerns. We continue to have the ability and intent to hold these investments until maturity. On the plus side, rising interest rates have provided the opportunity for higher reinvestment than we have seen in several years, which will benefit net investment income over time. Liquidity at the holding company remains strong with invested assets in cash of $232 million. In Primerica Life Gramer light, the statutory risk-based capital ratio was estimated to be about 460% at June 30, 2022. We will purchase $128 million of our common stock during the quarter between combined with our purchases and pre-prior period leaves around $80 million remaining of our $325 million program. Let me wrap up with an update on LDTI, which becomes effective next year. As a reminder, we are selecting a modified retrospective transition approach, and we'll apply the standard prospectively as of January 1, 2021. Starting with year-end 2020 balances for benefit reserves and DAC. One minor exception is that if LDTI assumptions increased the net premium ratio above 100% for a specific policy cohort, the ratio is capped at 100%. This may impact an isolated group of cohorts, but will not significantly impact opening reserve balances. We expect Term Life earnings to emerge more quickly under LDTI due to slower DAC amortization. While deferrable expenses do not change under the standard, capitalized costs will be amortized straight line based on current case amounts. You have a popular rider that allows face amount to increase annually by 10% for a period of 10 years. Under current GAAP, the level commissions on these riders are capitalized and amortized in the same period, whereas under LDTI, they will be amortized straight line like other acquisition costs. We expect our DAC amortization ratio to be reduced by 250 basis points to 350 basis points going forward compared to historically normal ranges that exclude recent pandemic-related volatility. We also expect earnings to emerge faster from benefit reserves as historically locked assumptions that include provision for adverse deviation are replaced with current best estimates. COVID claim variances that occurred since 2020 will be somewhat of an offset since under LDTI, the impact of experience variances is partially spread over future reporting periods. The impact of any assumption changes will also be partially spread to future periods under the modified retrospective adoption method. The portion spread to future periods is highest at the transition date and reduces over time as cohort durations progress. Given the homogenous and predictable nature of our business and our significant use of reinsurance, we do not expect large or frequent assumption changes to occur. Turning to the impact on equity, the standard requires the benefit reserves to be remeasured each reporting period under market observable rates based on an A rating with a difference between reserves using these rates and locked-in rates reflected in AOCI. Given the rated average of our reserve liabilities, the average lock-in valuation rate is approximately 5.25%. This is significantly higher than the year-end 2020 market observable rates, but much closer to current rates given the dramatic rise seen in 2022. If we applied the market observable rates in effect at June 30, 2022, the opening reserve balance at the date of transition, we estimate the after-tax reduction to AOCI would be less than $100 million. As a reminder, LDTI changes the timing of earnings, but it does not impact the true economics of the business, underlying cash flows, or statutory capital requirements. We'll continue to provide updates on LDTI as assumptions, processes, and control are finalized. With that, I will turn the call over to the operator for questions.

Our first question comes from Mark Hughes with Truist Securities. Mark, your line is now open.

Thank you. Good morning. Alison, you provided some excellent specific numbers on the DAC impact ranging from 250 basis points to 350 basis points. You discussed several other impacts as well, but regarding the effects on the P&L, should we primarily focus on that range of 250 to 350 basis points, or are there other specific line items and ranges you would like to discuss? Also, will this all take effect immediately? Will we see the full benefit upon implementation?

There are a few questions I will do my best to answer. The DAC amortization will be prospective, so moving forward from the transition date, we will see the pattern emerge in the range of 250 basis points to 350 basis points lower than before. To clarify, we have experienced significant volatility in our DAC ratio due to the impacts of COVID, so my comparisons are to pre-COVID levels, which are more normalized. It's relatively straightforward to compare DAC calculations because they are formulaic, while reserves have more variability since they depend on day one results. We believe that, as I mentioned in my comments, we won't see many large assumption changes given our business model and extensive use of reinsurance, which should protect us from significant volatility. Generally, we expect the benefits ratio to be lower under LDTI because it unlocks historical assumptions that have seen mortality improvements since they were set, and they were originally established with some padding. Therefore, this benefits ratio should be lower than what we typically see under current GAAP. One caveat is that we are still examining how COVID will impact future periods, as some of what we've recognized in our GAAP P&L for COVID will carry over, potentially offsetting some effects. Overall, we expect benefit reserves to be lower than they currently are. Additionally, regarding DAC amortization, I want to note that in our ISP segment, the DAC amortization on the SEG fund this quarter had a $4 million difference due to FAS97 type of accounting, and we will switch to a straight-line method, which should reduce volatility.

We say benefit ratio lower, it sounds like that's hundreds of basis points potentially, is that the magnitude?

Yes. At this time, we are being very cautious about our controls and stock documentation to ensure that we don't release numbers before everything is finalized. I can't provide a specific figure at the moment, but if you consider all of our business segments, they should begin to align with the current generally accepted accounting principles. It's also important to note the mortality risk, which reflects only the volatility of the exposure we have retained. I wouldn’t say that nothing changes due to the aspects related to reinsurers, but those costs are largely fixed.

Okay. Glenn, can you provide an outlook for the sales headcount? Do you anticipate either in Q3 or for the remainder of the year that your strong recruiting efforts will impact the overall sales force headcount?

Sales force headcount, I'm sorry, Mark, just to clarify. Is that the question?

Yes, exactly.

We are seeing positive results from our efforts to drive both recruiting and licensing pull-through. Our year-end sales force count is expected to reach approximately 134,000 licensed representatives, which is more optimistic than what we projected last quarter.

Yes, very good. And then one other question, the senior health policies in the quarter were from Primerica reps?

Yes. If you look at that all the way down to approved policies, you're looking right now, we're running in about the 4% range of total.

Our next question comes from Andrew Kligerman of Credit Suisse. Andrew, your line is now open. Please go ahead.

I want to ask about Senior Health. You mentioned a model aimed at improving activity, could you provide more details on that segment related to debt and profitability? I understand you're forecasting a $35 million loss this year. Where do you see potential improvements? I have quite a few questions.

Sure. In the second and third quarters, we're typically facing negative earnings due to low volume. The third quarter also involves preparing our agents for the Annual Enrollment Period. As I mentioned earlier, we expect to incur a loss this year, likely less than $10 million in additional funding. We are being cautious about our financial investments in this business as it adapts to industry changes. Our goal is to achieve profitability during this year's Annual Enrollment Period and to establish a strong position for the following year. We are being very careful with our cash outlay, so we won't fully loosen our constraints until we have several quarters of performance data. While there are various factors in the industry that could positively influence us, we need to allow some time for these dynamics to develop. Once we see solid progress based on our expectations, we can begin to invest more robustly in 2023.

And Andrew, if I could pick up on your question about agent count at ETG, we're at about 325 employed sales center agents at this point.

And the productivity model change, anything you would call out on that?

We are actively focusing on improving our most productive agents and reducing the number of those who are not effective or profitable. This effort is part of our current strategy where we are analyzing our productivity and concentrating on the most efficient and profitable representatives. Additionally, we are collaborating to enhance our product offerings. We are making adjustments and monitoring changes in productivity. While we are seeing positive trends, there is still a considerable amount of work ahead of us.

I understand. I would like to ask about the anticipated decline in investment and savings product sales. You are expecting roughly a 20% drop in sales for the third quarter, even though the market appears to have slightly improved during that time. Can you provide some insight into why you're forecasting such a notable decrease in the third quarter?

Yes, Andrew. As we've talked about in many of our discussions over the years, our client base tends to react a little more slowly to market events than maybe a higher-income client base would. And so generally, when things start turning down, we have some resistance to that for a period of time. And then when things start normalizing, it takes us a little longer ongoing stability and even improvement. Then hopefully, we'll see that turnaround start to take place. Just not sure if what's left in the third quarter if we can see it by then. So we're trying to take a reasonable approach to that.

Our next question comes from Ryan Krueger of KBW. Ryan, your line is now open. Please go ahead.

That was a bit of a different question maybe for Alison. Could you talk a little bit about how much the rough amount of annual dividends you'd expect to normally take out of your U.S. Life stubs? I know it posed around a fair amount.

Yes, there's been some thought put into this, and you can actually see it in the blue book; that number is rising. I'll provide some context on the dynamics. A few years ago, we had some anomalies related to how the transactions and economic reserves were handled, but that's behind us now. We've adjusted our expectations upward by about $50 million for next year compared to what we initially thought. Overall, the signals are quite positive. Additionally, we ended up with a 450% RBC, which we believe is more than necessary for a life insurance company. Part of that $50 million increase is aimed at bringing that figure down closer to around $420 million, with our target being to stay above $400 million. We keep a close eye on that because it's crucial to maintain enough capital for two main reasons: to support any growth initiatives we have within the life insurance sector and to uphold our ratings. Our strong capital position is a key factor in the favorable range we maintain. With that in mind, I anticipate the performance from the life insurance units will remain stable, with annual improvements expected as we move forward.

That's helpful. And then separately, I mean, I think it's varied some in the past, but could you give a little more context and when you have there been past recessions to what extent you have seen much of an impact within your Term Life book in terms of...

Yes, I'll begin, and then you can discuss the sales plan. During the 2008 period, our market was somewhat insulated. However, when it did react, the effects lasted longer than in other market segments. We experienced our greatest impact on persistency mostly between 2010 and 2012, even as the market began to recover, the economy remained stagnant, particularly affecting middle-income consumers. This trend was consistent across various durations, and we could see the market's effects on our performance. I haven't noticed significant fluctuations related to the economy since that time. The deterioration during COVID affected us universally, but as both Glenn and I pointed out, we have not observed increased redemptions on the ISP side. Even with the economic decline, our business remained stable.

Yes. I agree with Alison's comments. When we consider sales, we expect to see consistency in smaller sales sizes, which continue to grow. There could be positive sentiment around the importance of protecting family that contributes to these numbers. We mentioned in previous quarters that we anticipated some positive influence on sales, and that seems to be holding steady. While there is a lot of speculation, the outcome is that we are satisfied with our position in the current environment, regardless of the exact factors affecting it. We feel optimistic about our situation. To address the earlier question, if we can maintain our position until conditions improve, we may see positive momentum that could accelerate our growth moving forward.

I guess if I'm remembering correctly in prior sessions, in the early 2000s, for example, I don't believe you saw much of an impact on persistency in that period.

Not in that period. As Alison said, it's just only been in the most severe and extended, I would say.

Our next question comes from Jeff Schmitt from William Blair. Jeff, your line is now open. Please go ahead.

On the non-COVID claims trends, I think Alison said, they're about $5 million favorable versus historical levels. Is there potential for that trend to continue for separate users from kind of a change in mix? I mean, do you think you could have pulled some mortality for and maybe it will be light for the next few years?

After one quarter, I'm hesitant to declare a trend or any changes in the feature. I can say that we have been attentive to the insights shared by others in the industry, particularly some reinsurers. Our discussions with various reinsurers have indicated a noticeable improvement, and they suggest that this could be positive for us. We are monitoring the situation closely and won't make automatic assumptions, but we are observing indicators that align with what others in the field have publicly stated. It's worth mentioning that a significant portion of the activity was in Canada, and I suspect that could be attributed to regular volatility, although it accounts for only about half of what we experienced. There is certainly potential for growth, and we are waiting to see how things unfold before concluding that mortality improvement has indeed arrived.

In the ISP business, net flows were close to 4% in the quarter. I think well in 2020 and now begin after one of the toughest first halves in the stock market in a long time. Could you maybe talk to the industry?

I mentioned in my prepared remarks that we observe a more consistent set of assets in the industry. It's a bit challenging to make direct comparisons due to imperfect data reporting. Our long-term systematic investment strategy, which is not influenced by attempting to time the market, benefits both us and our clients. We believe this strategy, the advice we provide, and our clients' long-term perspective, as returns are usually long term for most clients, work to our advantage and help reduce our redemption rates compared to the industry. This trend is likely reflected in the numbers for this quarter.

Okay. Great. On the mortgage business, is there a cost structure there that's up the contract I'm just kind of a 50% decline in mortgage volume. Is that driving losses in that business now?

No, our infrastructure around our mortgage business is not huge at this point. And we do believe that there's a better day out there ahead of us, which is why I made the comments. We're continuing to pursue licenses in additional states and also that we are in position for fast growth. But we don't have a tremendous amount of infrastructure built around that. So there's not a significant challenge there expense-wise.

Next question is from Daniel Bergman of Jefferies. Daniel, your line is now open. Please go ahead.

Thank you for the detailed information. I was hoping you could provide any updates compared to your previous expectations, particularly regarding what you observed in the first quarter. The DAC amortization ratio appeared to exceed the guidance you had given earlier. Considering this trend, along with the pressures from inflation or a potential recession, how are you assessing the risk that persistency may continue to decline instead of stabilizing at current levels? Any further insights on this would be appreciated.

Yes, it's interesting to observe the seasonality in the numbers. When we set aside the impact of COVID, it's challenging to pinpoint what exactly is driving any trends. During the peak of the pandemic, we recognized that some business segments we were selling were unexpected and are now underperforming compared to pre-pandemic levels. However, the fact that other areas are still showing positive results is encouraging for future stabilization. We’re not necessarily looking for improvements compared to pre-pandemic performance, since that was already strong. Our focus is on achieving a level of consistency and profitability like we had before. Currently, we believe we are still on track to reach that goal.

Got it. That's very helpful. I wanted to follow up on your remarks about the convention and the message you delivered there. Could you provide any additional insights about the event and whether there were specific incentives or initiatives you introduced? You mentioned recruiting incentives; can you help us understand how the conference might influence near-term trends or third quarter results in terms of recruiting our product sales?

The event following COVID was significant. While we experienced some challenges with crowd size, we were pleased to see nearly 35,000 attendees, which was slightly lower than in 2019 for understandable reasons. The focus of the event was on looking forward rather than reflecting on the difficulties we have all faced in recent years. This positive outlook was refreshing and healthy. We emphasized our goal of expanding our sales force, which not only allows us to positively impact more families but also enhances the success of our sales leaders. It was essential that we grow to reach a larger market and create greater success for everyone involved with Primerica. This message was well received and supported by the sales force speakers, including both Peter and myself, along with Julie and other home office leaders. We also introduced new discounts on licensing fees, leadership events, and opportunities for participants to rejuvenate their efforts through contests. These initiatives were positively received, and we have seen a lot of encouraging activity since the convention. We anticipate exceptionally strong results, especially with the growing optimism regarding the size of our sales force. Overall, we consider the event to be a great success.

At this time, we currently have no further questions. Therefore, this concludes today's call. You may now disconnect your lines and have a lovely rest of your day.