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2010 Annual Report

Freedom Lives Here


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Our Company

2010 was an historic year orPrimerica. On April 1, 2010, we

became an independent company,

publicly traded on the New York

Stock Exchange. We view the

event as our re-ounding. We

trace our roots to A. L. Williams,Inc., an insurance agency ounded

in 1977 to distribute term lie

insurance as an alternative to cash

value lie insurance. A. L. Williams

popularized the concept o Buy

Term and Invest the Dierence,

reecting a view that we continue

to share today as Primerica, a Main

Street company delivering fnancial

products to Main Street amilies

across North America.


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A Main Street Company for Main Street Families


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Message to Stockholders

Dear Stockholders:

Since 1977, Primerica has helped millions o middle-income amilies with their fnancial needs by provid-

ing them with a strategy and means to gain fnancial independence. In 2010, we took an important step in our

companys independence and fnancial uture. Our historic initial public oering (IPO) on April 1, 2010 rein-

orced Primericas entrepreneurial spirit and instilled a great deal o pride among our sales orce and employees.

For these reasons, the IPO represented a new beginningthe re-ounding o our company. We believe the

concept o a re-ounding is appropriate because it not only signals a resh start, but pays homage to our proud

34-year history and track record. Our IPO gave us the opportunity to old our years o experience, expertise

and innovation into an organization with a more streamlined balance sheet. More importantly, the IPO has

allowed us to ocus on building Primerica or the long term.

Today, having successully completed our re-ounding, we are an independent company with a capital

structure that positions us to pursue opportunities to grow our existing businesses, while also seeking addi-

tional opportunities that we believe will build shareholder value over time. We are especially proud o what we

have been able to accomplish in an environment where millions o underserved middle-income amilies are

acing unprecedented fnancial challenges. We have made great strides in our frst year as a public company,

and we continue to be optimistic and excited about the uture o our business.

WHO WE ARE

Beginning in 1977, Primerica transormed the lie insurance industry with a philosophy that has en-

couraged amilies to purchase aordable term lie insurance and have more money to invest in their amilys

uture. Buy Term and Invest the Dierence is the cornerstone o the fnancial game plan o millions o

North American amilies that we have served over the years. Even as we expand our products and services, this

concept remains a oundation o our philosophy, enabling us to deliver over $939 million o death claims to

amilies in 2010.

Primerica representatives

assist clients in meeting their

needs or term lie insurance,

mutual unds, variable annui-

ties, loans and other fnancial

products. We insure more

than 4.3 million lives andmore than 2 million clients

maintain their investment

accounts with us, making us a

leading distributor o fnancia

products to middle-income

households in North America


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North Americas vastmiddle-income market has

long been underserved by

traditional fnancial services

frms. Our unique education-

al approach and ace-to-ace

distribution model allow us

to meet the needs o middle-

income amilies in a cost-

eective manner. Our unique

approach has proven itsel in

both avorable and challeng-

ing economic environments,

as evidenced by our results

this past year.

In addition, Primerica

provides an entrepreneurial

business opportunity or individuals seeking to distribute our fnancial products. Low entry costs and the

ability to begin on a part-time basis allow our recruits to supplement their existing income by starting an

independent business without leaving their current jobs.

OUR SALES FORCE IS VITAL TO OUR SUCCESS

Our ability to successully navigate a challenging economic environment is a testament to the skill,

proessionalism and longevity o our sales orce. More than 20,000 o our feld leaders have been with

Primerica or at least 10 years and 7,000 have been with the Company or at least 20 years.

Becoming a public company provided us with an opportunity to align the interests o our sales orce,

stockholders and the Company. Our key feld leadersour Regional Vice Presidentswere so enthusias-

tic about owning Primerica stock that our IPO-directed share program was more than two times oversub-

scribed. Providing a signifcant equity stake or our sales orce has created a unique ownership structure

in the fnancial services industry. We are proud o our equity incentive programs, which help build both

short- and long-term alignment or all o our stakeholders.

Most importantly or our business, the sales orces reaction to becoming a public company exceededour expectations. The IPO removed uncertainty about our uture and helped reinorce our position as a

stable, trusted advisor to middle-income amilies.

Ultimately, our capacity to grow Primerica rests on our ability to constantly improve the opportunity or

our independent sales representatives. Whether it is through new innovative incentives or improved product

oerings, we recognize the need to continually improve our opportunity. We believe that being re-ounded

as the largest independent fnancial services distribution company in North America opens new vistas or us.

We are committed to using this reedom to continually improve our business opportunity.


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2010 PERFORMANCEWe are extremely proud o what we have been able to accomplish during a challenging economic environ-

ment or our target market. Our Term Lie business outperormed the industry. Our policies issued were down

only 4% in 2010 compared to 2009, while the term lie policies issued in the industry declined 12%, accord-

ing to LIMRA. Our recruiting growth also outpaced the direct selling industry in 2010. Primericas recruiting

increased 4% while the direct selling industry experienced an 8% decline in recruiting compared to 2009. The

size o our lie-licensed insurance sales orce declined 5% at year-end 2010 compared to year-end 2009 as li-

censing and non-renewals experienced downward pressure in the difcult economic environment. Investment

and savings products sales grew 21% in 2010 compared to 2009 while annuity sales signifcantly outpaced the

industry increasing 27% in 2010 compared to 2009.

The difcult market conditions aected our investment portolio. However, with prudent expensemanagement and growth in our investment and savings products sales and asset values, we were able to

deliver strong fnancial results or the year.

Net income was $257.8 million or 2010

compared to $494.6 million or 2009. Net

income or 2009 as well as the frst quarter o

2010 was higher because it did not reect the

impact o the Citi reinsurance and reorganiza-

tion transactions executed in March and April

o 2010. As adjusted to reect these transac-

tions as well as other operating adjustments, ne

operating income was $161.5 million or 2010

compared to $158.4 million or 2009.

Our perormance this year was well re-

ceived by investors. Common stock ended the

year at $24.25, up 62% rom the IPO oering price o $15.00 and up 27% rom the opening price o $19.15

on April 1, 2010. That compares with an increase o 8% by the S&P 500 Index over the same time period.

Throughout 2010, we maintained a conservative balance sheet and strong capital position. As o Decem-

ber 31, 2010, our investments and cash totaled $2.28 billion and our debt-to-capital ratio remained low at

17.3%. Our statutory risk-based capital ratio (RBC) was estimated to be in excess o 570% as o December

31, 2010, positioning us well or uture growth while remaining signifcantly above our long-term RBC target

OUR VALUE PROPOSITION

Traditional fnancial services companies have long ocused on a dierent segment o the marketspecif-

cally higher net-worth clientsor their investment and wealth management service oerings. Further, recent

statistics show that these companies are moving an increasing portion o their lie insurance businesses to

wealthier North Americans. At Primerica, we take a much dierent approach. We are a Main Street company

that caters to the needs o Main Street consumers. More importantly, we recognize that the middle market is

vast and largely underserved.

$15

$20

$25

April 1(IPO)

June 30 Sept 30 Dec 31


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More than 50 percent o U.S. households all in the middle-income market, and we believe our educa-tional approach and unparalleled distribution model allow us to meet the fnancial needs o these consumers

more proftably than any other company. A recent study indicated that 35 million American households

have no lie insurance and, o those who are covered, most have ar less coverage than experts recommend. In

addition, most consumers preer to work with an agent, rather than over the Internet or via toll-ree num-

bers, when purchasing something as important and personal as lie insurance. We believe Primericas licensed

lie insurance sales orce, approximately 95,000 strong, is uniquely equipped to serve the middle market.

The size and local presence o our sales orce allow them to sit across the kitchen table rom their clients and

provide the education they need ace-to-ace. In short, we have a vast market to grow our business in and the

business model to do it eectively.

We are ocused on building Primerica or the uture and are working diligently to improve all areas o

our business. From product improvements and technology innovations to creating a better business oppor-

tunity, we are totally ocused on building Primerica or the long term.

We strongly believe in the long-term growth prospects o Primerica and are encouraged by the attitude,

perseverance and commitment o our sales orce. Our long-standing management teama 14-member ex-

ecutive team averaging 26 years with Primericaremains committed to improving oerings or our clients,

enhancing the business opportunity or our sales representatives, and delivering on the promises we made at

our re-ounding.

Our solid track record, attractive products, capital strength and strong distribution capabilities will

enable us to capture the substantial growth opportunity beore us. We had an extraordinary frst year as a

public company and are excited to have taken important steps in the uture o Primerica.

Sincerely,

John A. Addison, Jr.

Chairman o Primerica Distribution,

Co-Chie Executive Ofcer and Director

D. Richard Williams

Chairman o the Board and

Co-Chie Executive Ofcer


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Just like most peoplewho just turned 21, Daniel

Alonzo had big dreams.

He wanted to be a

cartoonist, but everybody

kept telling him no. It was

about that time that one

company actually opened

the door for him, and he

stepped right in.

Primerica taught me

how to dream again, taught

me how to be courageous,they taught me how to per-

sist until I succeed, Daniel

remembers.

He was making $7 an

hour at the time, and his

future wife, Karma, was

still in college, but every-

thing changed when their

Primerica career got off to

a fast start.

The couple didnt just

make money, however,they followed the nancial

principles the company

had taught themsaving

money, investing wisely,

living below their means.

We made good decisions,

Daniel says, and because

of that we became nan-

cially independent within

seven years of joining the

company. We had saved

one million dollars.


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Primerica is a Main Street company or Main Street North America. Our clientsare generally middle-market amilies, a market that traditionally has been neglected

by the fnancial services industry. This market needs what Primerica oers more than

ever beore. Our distribution model, which borrows aspects rom ranchising, direct

sales and traditional insurance agencies, is designed to reach and serve middle income

consumers efciently.

Our mission is to help amilies become properly protected, debt ree and fnan-

cially independent. Using an educational approach and our unique distribution model

Primerica is positioned to address the middle markets needs, which we know well:

They have inadequate or no life insurance coverage

They need help saving for retirement or other goals

They need to reduce their debt

They prefer to meet face-to-face when considering nancial products

They need a vehicle to help themselves generate additional income

We are Primerica


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In June of 2010Guiseppe Vaiasuso died

at the age of 35 from

brain cancer, leaving

32-year-old wife, Karolien

and two children, nine

and six years old. It was

a tragic death at a young

ageand yet Guiseppe

was able to provide for

his familys needs.

Only a couple of yearsbefore, the couple had

no life insurance at all

until they met Primerica

Regional Vice President,

Desi Torrez. Desi met

with Guiseppe and Karo-

lien in their home and,

with their input, analyzed

their nancial needs. Desi

put together a nancial

game plan for the familythat included a Primerica

Custom Advantage term

life insurance policy.

Before Guiseppe

died, he knew that his

family had the nancial

wherewithal to move on

with life.

Had it not been for

Primerica, I dont know

what I would have done.We never went shopping

for life insurance. If Desi

hadnt taken the time

to talk to us, who knows

what would be happening

to our family. Because of

Primerica, we are nan-

cially secure.


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Primerica is poised to solve the fnancial problems o the middle market. Our repre-sentatives meet with amilies in their own homes, across the kitchen table, and teach them

how money works. These undamental fnancial concepts are not taught in school. Prim-

erica believes everyone has a right to know these simple principlesnot just the wealthy.

Our representatives use our proprietary fnancial needs analysis tool and an educational

approach to demonstrate how our products can assist clients to provide fnancial protection

or their amilies, save or their retirement and reduce their debt. Typically, our clients are

the riends, amily members and personal acquaintances o our representatives.

Primerica representa-

tives Luz Sanchez and

Desi Torrez with the

Vaiasuso family.

Primerica helps familiescreate a nancial game plan.


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Events and incen-tive trips give Primerica

reps something extra to

compete for and offer a

chance for on-site recogni-

tion of their achievements.

The biggest of these big

events is the convention

that is held on a bien-

nial basis. In June of 2011,

approximately 50,000

Primerica representatives

are expected to gatherat the Georgia Dome in

Atlanta for the three-day

event. Leading up to the

convention are competi-

tions for on-stage recogni-

tion in front of a packed

Georgia Dome. Require-

ments for recognition are

tied to production and

they help to drive recruit-

ing, licensing and sales.

Primerica oers average and ordinary individuals a chance to build their own businessand change their lives. We provide an entrepreneurial business opportunity or individuals

to distribute our fnancial products and help people get on a path to fnancial indepen-

dence.

While the lack o start-up capital is a barrier or most would-be entrepreneurs, Primerica

representatives can begin with low entry costs and the ability to begin part-time which al-

lows them to start an independent business without leaving their current jobs.

Our unique compensation structure, cutting-edge technology, extensive training and e-

fcient back-ofce processing are designed to enable our representatives to successully grow

their independent businesses.

While other companies target the auent, Primerica helps hardworking middle-market

amilies all across North America. Our market is large and growing every day. Through

education, a customized fnancial strategy, and a source or additional income, our clients

are able to take advantage o our common sense solutions and get on the path to fnancial

independence and reedom.

Primerica provides abusiness opportunity.


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Ren Turner wasalways told growing up

to study hard and get

good grades. The plan

appeared to be right on

track when Ren gradu-

ated from Georgia Tech

with a degree in industri-

al engineering. Just two

years later, however, Ren

realized she was far from

where she really wanted

to be.I didnt like my situa-

tion, Ren says. I didnt

like my schedule, didnt

like my income, I didnt

feel like I was getting paid

what I deserved. I really

was looking for options.

Along the way, Ren

and her husband Mel

had been introduced to

Primerica, and he started

in the business rst. Afterthe birth of their rst

child, Mel was called to

the ministry, and Ren

decided it was time for

her own career change.

This company provides

the environment and the

support that allows you

to achieve success, said

Ren, who has since built

a big business and is one

of the most respected

women in all of Primerica

I wouldnt be anywhere

else.


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When he was in the

NFL, Abram Booty ofShreveport, LA, was

time poor. There were no

Thanksgivings or Christ-

mases. Thats when games

are played. Days off were

few and far between.

Breaks were short. There

were practices to hold. For

a couple that had just had

a child, it was an emotional

drain.Now, Abram makes

more money each year

with Primerica than he

did in the NFL or when he

started coachingand he

gets to see his wife, Amy,

and their kids whenever

hed like. With Primerica,

he said, he can make the

money of a professional

athlete and still have afamily life.

Abram started in

Primerica to supplement

his coaching income. It

became a way through

which he lives his dream

life. I look back at people

I was coaching with, and I

see that there have been

no pay raises in the years

since I left, he said. His

business is still booming,

though, he says.

Today, Abram and Amy

are both grateful for the

difference Primerica has

made in their lives, allow-

ing them to spend more

time with their family

and live a lifestyle most

people only dream about.


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We teach people how money works.

We help people build a business of their own.

We believe in freedom.

We are Primerica.

Freedom Lives Here.


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John A. Addison, Jr.Chairman oPrimerica DistributionCo-CEO, Primerica, Inc.

P. George BensonPresidentThe College o Charleston

Michael E. MartinPartner, Warburg Pincus & Co.Managing Director,

Warburg Pincus LLC

Mark MasonChie Operating Ofcer,Citi HoldingsCitigroup, Inc.

Ellyn A. McColganRetired President andChie Operating OfcerGlobal Wealth ManagementGroup, Morgan Stanley

Robert F. McCulloughRetired Senior PartnerInvesco Ltd.

D. Richard WilliamsChairman o the Boardand Co-CEOPrimerica, Inc.

Barbara A. YastineChie Administrative Ofcer

Ally Financial, Inc.

Daniel ZilbermanPartner, Warburg Pincus & CoManaging Director,

Warburg Pincus LLC

John A. Addison, Jr.Chairman oPrimerica DistributionCo-CEO, Primerica, Inc.

Jerey S. FendlerPresident,Primerica Lie InsuranceCompany

William A. KellyPresident,PFS Investments Inc.

Gregory C. PittsExecutive Vice President andChie Operating Ofcer,Primerica, Inc.

Alison S. RandExecutive Vice President andChie Financial Ofcer,Primerica, Inc.

Peter W. SchneiderExecutive Vice President,General Counsel,Corporate Secretary andChie Administrative Ofcer,Primerica, Inc.

Glenn J. WilliamsPresident,Primerica, Inc.

D. Richard WilliamsChairman o the Boardand Co-CEO,

Primerica, Inc.

Board o Directors

Executive Ofcers

Top row: M. Martin, R. McCullough, E. McColgan, D. Zilberman,

P.G. Benson, M. Mason

Bottom row: R. Williams, J. Addison

Not pictured: B. Yastine

Top row: A. Rand, G. Pitts, P. Schneider, G. Williams

Bottom row: R. Williams, J. Addison

Not pictured: J. Fendler, W. Kelly


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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 2010

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934

For the transition period from to

Commission File Number: 001-34680

Primerica, Inc.(Exact name of registrant as specified in its charter)

Delaware 27-1204330(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

3120 Breckinridge BoulevardDuluth, Georgia 30099

(Address of principal executive offices) (ZIP Code)

Registrants telephone number, including area code: 770.381.1000

Securities registered pursuant to Section 12(b) of the Act:Title of each class Name of each exchange on which registered

Common Stock, $.01 Par Value New York Stock Exchange

Securities registered pursuant to section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct. Yes No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes NoIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) ofthe Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrantwas required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, ifany, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant wasrequired to submit and post such files). Yes No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ( 229.405 of thischapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxyor information statements incorporated by reference in Part III of this Form 10-K or any amendment to thisForm 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated

filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer andsmaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer Accelerated filer

Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ExchangeAct). Yes No

The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2010, was$547,542,546.

The number of shares of the registrants Common Stock outstanding at February 28, 2011, with $.01 par value, was73,188,018.

Documents Incorporated By Reference

Certain information contained in the Proxy Statement for the Companys Annual Meeting of Stockholders to beheld on May 18, 2011 is incorporated by reference into Part III hereof.


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TABLE OF CONTENTS

Page

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Item 1. Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3Item 1A. Risk Factors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Item 2. Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Item 3. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61Item X. Executive Officers of the Registrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer

Purchases of Equity Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Item 6. Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67Item 7. Managements Discussion and Analysis of Financial Condition and Results of

Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68Item 7A. Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . . . . . . . . . 105Item 8. Financial Statements and Supplementary Data. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106Item 9. Changes in and Disagreements With Accountants on Accounting and Financial

Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155Item 9A. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156Item 10. Directors, Executive Officers and Corporate Governance. . . . . . . . . . . . . . . . . . . . . . . . . . 156Item 11. Executive Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160Item 12. Security Ownership of Certain Beneficial Owners and Management and Related

Stockholder Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160Item 13. Certain Relationships and Related Transactions, and Director Independence. . . . . . . . 160Item 14. Principal Accounting Fees and Services. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161Item 15. Exhibits and Financial Statement Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 176


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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Certain statements contained in this report aswell as some statements in periodic pressreleases and some oral statements made bymanagement during presentations areforward-looking statements. Forward-looking

statements include, without limitation, anystatement that may project, indicate or implyfuture results, events, performance orachievements, and may contain the wordsexpect, intend, plan, anticipate,estimate, believe, will be, will continue,will likely result, and similar expressions, orfuture conditional verbs such as may, will,should, would, and could. In addition, anystatement concerning future financialperformance (including future revenues,earnings or growth rates), ongoing business

strategies or prospects, and possible actionstaken by us or our subsidiaries, which may beprovided by our management teams, are alsoforward-looking statements. These forward-looking statements involve external risks anduncertainties, including, but not limited to,those described under the section entitled RiskFactors included herein.

Forward-looking statements are based oncurrent expectations and projections aboutfuture events and are inherently subject to avariety of risks and uncertainties, many of

which are beyond the control of ourmanagement team. These risks anduncertainties include, among others:

our failure to continue to attract newrecruits, retain sales representatives, ormaintain the licensing of our salesrepresentatives;

changes to the independent contractorstatus of our sales representatives;

our or our sales representatives violation ofor non-compliance with laws and regulations;

our failure to protect the confidentiality ofclient information;

differences between our actual experienceand our expectations regarding mortality,persistency, expenses and investmentyields as reflected in the pricing for ourinsurance policies;

the occurrence of a catastrophic event thatcauses a large number of prematuredeaths of our insureds;

changes in, or non-compliance with, federal

and state legislation and regulation,including the Dodd-Frank Wall StreetReform and Consumer Protection Act of2010 and other legislation or regulationthat affects our insurance, investmentproduct and loan businesses;

our failure to meet risk-based capitalstandards or other minimum capital andsurplus requirements;

a downgrade or potential downgrade in ourinsurance subsidiaries financial strengthratings;

the effects of credit deterioration andinterest rate fluctuations on our investedasset portfolio;

incorrectly valuing our investments;

inadequate or unaffordable reinsurance orthe failure of our reinsurers to performtheir obligations;

recent changes in accounting for deferredpolicy acquisition costs of insuranceentities and other changes in accounting

standards;

the failure of our investment products toremain competitive with other investmentoptions;

heightened standards of conduct or morestringent licensing requirements for oursales representatives;

inadequate policies and proceduresregarding suitability review of clienttransactions;

the failure of, or legal challenges to, thesupport tools we provide to our sales force;

the inability of our subsidiaries to paydividends or make distributions;

the effects of a delay in the recovery of theU.S. and Canadian economies;

Primerica 2010 Annual Report 1


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our ability to generate and maintain asufficient amount of capital;

our non-compliance with the covenants ofour note payable;

legal and regulatory investigations and

actions concerning us or our salesrepresentatives;

the competitive environment;

the loss of key personnel;

the failure of our information technologysystems, breach of our informationsecurity or failure of our businesscontinuity plan;

fluctuations in Canadian currencyexchange rates;

conflicts of interests due to Citigroup Inc.s(Citi) significant interest in us, WarburgPincus significant interest in us and thelimited liability of Citis directors and

officers for breach of fiduciary duty; and

engagement by Citi in the same type ofbusinesses that we conduct.

Developments in any of these areas couldcause actual results to differ materially fromthose anticipated or projected or cause asignificant reduction in the market price of ourcommon stock.

2 Freedom Lives Here


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PART I

ITEM 1. BUSINESS

Overview

Primerica, Inc. (Primerica or we) is a

leading distributor of financial products tomiddle income households in the United Statesand Canada with approximately 95,000licensed sales representatives at December 31,2010. We assist our clients in meeting theirneeds for term life insurance, which weunderwrite, and mutual funds, annuities andother financial products, which we distributeprimarily on behalf of third parties. We insuredmore than 4.3 million lives and more than twomillion clients maintained investment accountswith us at December 31, 2010. Our distributionmodel uniquely positions us to reach

underserved middle income consumers in acost effective manner and has proven itself inboth favorable and challenging economicenvironments.

Our mission is to serve middle income familiesby helping them make informed financialdecisions and providing them with a strategyand means to gain financial independence. Ourdistribution model is designed to:

Address our clients financial needs: Oursales representatives use our proprietary

financial needs analysis (FNA) tool andan educational approach to demonstratehow our products can assist clients toprovide financial protection for theirfamilies, save for their retirement andmanage their debt. Typically, our clientsare the friends, family members andpersonal acquaintances of our salesrepresentatives. Meetings are generallyheld in informal, face-to-face settings,usually in the clients own homes.

Provide a business opportunity: Weprovide an entrepreneurial businessopportunity for individuals to distribute ourfinancial products. Low entry costs and theability to begin part-time allow our recruitsto supplement their income by startingtheir own independent businesses withoutincurring significant start-up costs orleaving their current jobs. Our uniquecompensation structure, technology,

training and back-office processing aredesigned to enable our salesrepresentatives to successfully grow theirindependent businesses.

Corporate Structure and History

We conduct our principal business activities inthe United States through four principalentities, all of which are wholly ownedsubsidiaries: Primerica Financial Services, Inc.(PFS), our general agency and marketingcompany; Primerica Life Insurance Company(Primerica Life), our principal life insurancecompany; PFS Investments Inc. (PFSInvestments), our securities products companyand broker-dealer; and Primerica FinancialServices Home Mortgages, Inc. (PrimericaMortgages), our loan broker company. Our

Canadian operations are primarily conductedby Primerica Life Insurance Company ofCanada (Primerica Life Canada), ourCanadian life insurance company, and PFSLInvestments Canada Ltd., our Canadian licensedmutual fund dealer. Primerica Life, domiciled inMassachusetts, owns one principal subsidiary,National Benefit Life Insurance Company(NBLIC), a New York life insurance company.

As of December 31, 2010, Citi ownedapproximately 40% and Warburg Pincus ownedapproximately 23% of our outstanding commonstock.

Primerica was incorporated in Delaware inOctober 2009 to serve as a holding companyfor the Primerica businesses. However, wetrace our core business of offering term lifeinsurance policies through a sales organizationof independent sales representatives to 1977. In1977, Arthur L. Williams, Jr. formed A.L.Williams & Associates, Inc. (A.L. Williams), anindependent general agency that was dedicatedto selling term life insurance through a salesforce of seven Regional Vice Presidents(RVPs) and 85 sales representatives. A.L.Williams grew rapidly from its inception andbecame one of the top sellers of individual lifeinsurance in the United States. The operationsof A.L. Williams formed the foundation of ourgeneral agency subsidiary, PFS, and of oursales force. Our insurance and securitiesoperations are also well-seasoned.



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Primerica Life was formed in 1927 under thename of Fraternal Protective InsuranceCompany, and PFS Investments was formed in1981 under the name of First American NationalSecurities, Inc. Primerica Life, PFS Investmentsand the assets and operations of PFS were

acquired by predecessors of Citi through aseries of transactions in the late 1980s.

Our businesses, which prior to April 1, 2010were wholly owned indirect subsidiaries of Citi,were transferred to us by Citi in areorganization pursuant to which we issued to awholly owned subsidiary of Citi (i) 74,990,900shares of our common stock, (ii) warrants topurchase from us an aggregate of 4,103,110shares of our common stock and (iii) a $300.0million note payable due on Mach 31, 2015,bearing interest at an annual rate of 5.5% (the

Citi note). Citi then:

sold 24,564,000 shares of our commonstock in our initial public offeringcompleted in April 2010 (the Offering);

sold 16,412,440 shares of our commonstock and the warrants to private equityfunds managed by Warburg Pincus LLC(Warburg Pincus) in mid-April 2010 (theprivate sale); and

contributed back to us 5,021,412 shares of

our common stock for equity awardsgranted to employees and sales forceleaders in connection with the Offering.

In March 2010, we entered into coinsuranceagreements (the Citi reinsuranceagreements) with two affiliates of Citi and withPrime Reinsurance Company, Inc. (Prime Re),then a wholly owned subsidiary of PrimericaLife (collectively, the Citi reinsurers). For adescription of the Citi reinsurance transactions,see Management Discussion and Analysis ofFinancial Condition and Results of Operations The Transactions The reinsurancetransactions. We completed additionaltransactions concurrently with the Offering andthe Citi reinsurance transactions, which aredescribed under Management Discussion andAnalysis of Financial Condition and Results ofOperations The Transactions The concurrenttransactions.

Our Clients

Our clients are generally middle incomeconsumers. We define middle incomeconsumers as households with $30,000 to$100,000 of annual income. According to the2009 U.S. Census Bureau Current Population

Survey, approximately 50% of U.S. householdsfall in this range. We believe that weunderstand the financial needs of the middleincome segment well:

They have inadequate or no life insurancecoverage. Individual life insurance salesin the United States declined from12.5 million policy sales in 1975 to6.7 million policy sales in 2009, the latestperiod for which data is available,according to LIMRA. We believe that termlife insurance, which we have provided to

middle income clients for many years, isgenerally the best option for them to meettheir life insurance needs due to its lowerinitial cost versus cash value life insuranceand for the protection that it provides atcritical points in our clients lives.

They need help saving for retirement andother personal goals. The decrease in thevalue of households retirement accountassets has intensified the challenges ofmiddle income families to save forretirement and the education of theirchildren. By developing personalizedsavings programs for our clients using ourproprietary FNA tool and offering a widerange of mutual fund, annuity andsegregated fund products sponsored andmanaged by reputable firms, our salesrepresentatives are well equipped to helpclients develop long-term savings andretirement plans to address their financialneeds.

They need to reduce their consumerdebt. Many middle income families havenumerous debt obligations for credit card,auto loan, home-equity and mortgage debt.We help our clients address these financialburdens, including through debtconsolidation loans that allow them toconsolidate their debt and accelerate itsrepayment and personalized client-drivendebt management techniques that help



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them reduce and ultimately pay off theirdebts.

They prefer to meet face-to-face whenconsidering financial products. In a 2008survey conducted by LIMRA, 72% of U.S.middle income consumers indicated their

desire to speak with a professional aboutat least one financial product or service,with the majority expressing a preferenceto meet face-to-face. Our business model isdesigned to directly address theface-to-face preference expressed by themajority of middle market consumers in acost-effective manner.

We believe that our educational approach anddistribution model best position us to addressthe unique needs of the middle incomeconsumer profitably, which traditional financial

services firms have found difficult toaccomplish.

Our Distribution Model

The high fixed costs associated with in-housesales personnel and salaried career agents andthe smaller-sized sales transactions typical ofmiddle income consumers have forced manyother financial services companies to focus onmore affluent consumers. Product sales toaffluent consumers tend to be larger,

generating more sizable commissions for theselling agent, who usually works on a full-timebasis. As a result, this segment has becomeincreasingly competitive. Our distributionmodel borrowing aspects from franchising,direct sales and traditional insurance agencies is designed to reach and serve middle incomeconsumers efficiently.

Key characteristics of our unique distributionmodel include:

Independent entrepreneurs: Our salesrepresentatives are independentcontractors building and operating theirown businesses. This business-within-a-business approach means that our salesrepresentatives are entrepreneurs whotake responsibility for selling products,recruiting sales representatives, settingtheir own schedules and managing andpaying the expenses associated with their

sales activities, including office rent andadministrative overhead.

Part-time opportunity: By offering aflexible part-time opportunity, we are ableto attract a significant number of recruitswho desire to earn supplemental income

and generally concentrate on smaller-sizedtransactions typical of middle incomeconsumers. Virtually all of our salesrepresentatives begin selling our productson a part-time basis, which enables them tohold jobs while exploring an opportunitywith us.

Incentive to build distribution: When asale is made, the selling representativereceives a commission, as does therepresentative who recruited him or her,

which we refer to as overridecompensation. Override compensation ispaid through several levels of the sellingrepresentatives recruitment andsupervisory organization. This structuremotivates existing sales representatives togrow our sales force by providing themwith commission income from the salescompleted by their recruits.

Innovative compensation system: We havedeveloped an innovative system forcompensating our independent sales force

that is primarily tied to and contingent uponproduct sales. We advance to ourrepresentatives a significant portion of theirinsurance commissions upon theirsubmission of an insurance application andthe first months premium payment. Inaddition to being a source of motivation forour sales force, this upfront paymentprovides our sales force with immediatecash flow to offset costs associated withoriginating the business. In addition,monthly production bonuses on term lifeinsurance sales are paid to salesrepresentatives whose downline salesorganizations meet certain sales levels. Withcompensation primarily tied to salesactivity, our compensation approachaccommodates varying degrees ofindividual sales representative productivity,which allows us to use a large group of part-time representatives cost effectively and



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gives us a variable cost structure. Inaddition, we incentivize our RVPs withequity compensation, which aligns theirinterests with those of our stockholders.

Large dynamic sales force: The membersof our sales force primarily target and

serve their friends, family members andpersonal acquaintances throughindividually driven networking activities.We believe that this warm marketsapproach is an effective way to distributeour products because it facilitatesface-to-face interaction initiated by atrusted acquaintance of the prospectivecustomer, which is difficult to replicateusing other distribution approaches. Due tothe large size of our sales force, attritionand our active recruiting of new sales

representatives, our sales force isconstantly renewing itself by adding newmembers, which allows us to continue toaccess an expanding base of our salesrepresentatives contacts. By relying on avery large and ever-renewing sales forcethat has access to and a desire to helpfriends, family members and personalacquaintances, we are able to reach a widemarket without engaging costly mediachannels.

Sales force leadership: A sales

representative who has built a successfulorganization can achieve the salesdesignation of RVP and can earn highercommissions and bonuses. RVPs areindependent contractors who open andoperate offices for their salesorganizations and devote their fullattention to their Primerica businesses.RVPs also support and monitor the part-time sales representatives on whose salesthey earn override commissions incompliance with applicable regulatory

requirements. RVPs efforts to expandtheir businesses are a primary driver of oursuccess.

Motivational culture: Through sales forcerecognition events and contests, we seekto create a culture that inspires andrewards our sales representatives for theirpersonal successes. We believe this

motivational environment is a majorreason that many sales representativesjoin and achieve success in our business.

Structure and Scalability of OurSales Force

Our sales force consists of independent salesrepresentatives. When new salesrepresentatives are recruited by existing salesrepresentatives, they join our sales force withan upline relationship with the salesrepresentative who recruited them and with therecruiting sales representatives respectiveupline RVP organization. As new salesrepresentatives are successful in recruitingother sales representatives, they begin to buildtheir own organization of sales representativeswho become their downline salesrepresentatives. Sales representatives areencouraged to recruit other salesrepresentatives and build their own downlineorganizations to earn override commissions onsales made by members of their downlineorganization. Our sales representatives viewbuilding their own downline organizations asbuilding their own business within a business.

While the substantial majority of our salesrepresentatives are part-time, at December 31,2010 approximately 4,000 served as RVPs whodevote their full attention to our organization.RVPs establish and maintain their own offices,which we refer to as field offices, and fund thecost of administrative staff, marketingmaterials, travel and training and recognitionevents for the sales representatives in theirrespective downline organizations. Field officesmaintained by RVPs provide a location forconducting recruiting meetings, training eventsand sales-related meetings, disseminating ourInternet-streamed TV programming, conductingcompliance functions, and housing field officebusiness records.

Our sales-related expenses are primarily variablecosts that fluctuate with product sales volumeand consist primarily of sales commissions paidto our sales representatives and, to a lesserextent, both fixed and variable costs associatedwith our incentive programs, sales management,training, information technology, complianceand administrative activities.



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With the support of our home office staff, RVPsplay a major role in training, motivating andmonitoring our sales representatives. Becausethe primary determinant of a salesrepresentatives compensation is the size andproductivity of his or her downline

organization, our distribution model providesfinancial rewards to our sales representativeswho successfully recruit, support and monitorproductive sales representatives for ourcompany. We believe that new tools andtechnology, coupled with our equity incentiveaward program, further incentivize our salesrepresentatives to become RVPs. The new toolsand technology that we have made available toour RVPs enable them to reduce the time spenton administrative responsibilities associatedwith their sales organization so they can devotemore time to the sales and recruiting activities

that drive our growth. See Sales ForceSupport and Tools below.

Both the structure of our sales force and thecapacity of our support capabilities provide uswith a high degree of scalability as we grow ourbusiness. Our support systems and technologyare capable of supporting a large sales forceand a high volume of transactions. In addition,the sharing of training and oversight activitiesbetween us and RVPs allows us to grow withoutincurring proportionate overhead expenses toaccommodate an increase in salesrepresentatives, clients, product sales andtransactions.

Recruitment of SalesRepresentatives

Our ongoing recruitment, training and licensingof new sales representatives are critical for oursuccess. Our sales force is our sole distributionchannel. Our recruiting process is designed torecruit new sales representatives and to reach

new prospective clients. Recruits often becomeour clients or provide us with access to theirfriends, family members and personalacquaintances, which expand our market reach.As a result, we have developed, and continue toseek to improve, a systematic approach to

recruiting new sales representatives andtraining them so they can obtain the requisitelicensing to succeed.

Similar to other distribution systems that relyupon part-time sales representatives andtypical of the life insurance industry generally,we experience wide disparities in theproductivity of individual sales representatives.Many new recruits elect not to obtain therequisite licenses, and many of our licensedsales representatives are only marginally activeor are inactive in our business each year. We

plan for this disparate level of salesrepresentative productivity and view acontinuous recruiting cycle as a key componentof our distribution model. Our distributionmodel is designed to address the varyingproductivity associated with using part-timesales representatives by paying salescompensation based on sales activity,emphasizing the recruiting of new salesrepresentatives and continuing ongoinginitiatives to address barriers to licensing newrecruits. Our sales force compensationstructure, by providing override commissions tosales representatives on the sales generated bytheir downline sales organization, aligns ourinterest in recruiting new representatives withthe interests of our sales representatives.

We recruit and offer training to new salesrepresentatives in very large numbers. Manynew recruits do not complete the requirementsto obtain their individual life insurance licensesmainly due to the time commitment required toobtain licenses and various regulatory hurdles.



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The table below highlights the number of newrecruits, newly insurance-licensed salesrepresentatives, and average number of newlyinsurance-licensed sales representatives:

Year ended December 31,

2010 2009 2008

Number of new recruits 231,390 221,920 235,125Number of newly insurance-licensed sales representatives 34,488 37,629 39,383Number of insurance-licensed sales representatives, at period end 94,850 99,785 100,651Average number of insurance-licensed sales representatives during

period 96,840 100,569 99,361

We define new recruits as individuals who havesubmitted an application to join our sales force,together with payment of a fee to commencetheir pre-licensing training. We may not approvecertain new recruits to join our sales force, andothers elect to withdraw from our sales force

prior to becoming active in our business.

On average, it requires approximately threemonths for our sales representatives tocomplete the necessary applications andpre-licensing coursework and to pass theapplicable state or provincial examinations toobtain a license to sell our term life insuranceproducts. As a result, individuals recruited tojoin our sales force within a given fiscal periodmay not become licensed sales representativesuntil a subsequent fiscal period.

We have launched several recruiting andlicensing initiatives that are designed to help usmaintain and increase our recruiting andlicensing activity and ultimately grow theaggregate size of our licensed sales force,including:

introducing a Fast Start Bonus programthat provides new representatives anopportunity to earn compensation quickly;

providing our sales force with the ability toregister new recruits almost

instantaneously using their mobile devices,which allows our new recruits to getstarted in building their businessesimmediately;

developing a wide array of courses,training tools and incentives that assist andencourage new recruits to obtain therequisite licenses; and

working with industry and tradeassociations to address unnecessaryregulatory barriers to licensing qualifiedcandidates.

Recruiting sales representatives is undertakenby our existing sales representatives, whoidentify prospects and share with them thebenefits of associating with our organization.Our sales representatives showcase ourorganization as dynamic and capable ofchanging lives for the better by demonstratingthe success achieved by members of our salesforce.

After the initial contact, prospective recruitstypically are invited to an opportunitymeeting, which is conducted by an RVP at afield office. The objective of such meetings is toinform recruits about our mission and theiropportunity to join our sales force. At theconclusion of each opportunity meeting,prospective recruits are asked to complete anapplication and pay a $99 fee to commencetheir pre-licensing training and licensingexamination preparation programs. Manyrecruits also elect to pay $25 per month for asubscription to Primerica Online, our extensivewebsite for our sales force. Recruits are notobligated to purchase any of our products tobecome a sales representative, although theyoften elect to do so.

Recognizing that our successful salesrepresentatives generally are active in ourbusiness in the evenings and on the weekends,we have created a Partnership Program for thespouses and significant others of our salesrepresentatives to provide them withmeaningful roles in our business. For example,a sales representatives partner is typically



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recognized with the sales representative forawards and honors. Moreover, it is common fora partner to serve as an office manager oradministrator in a field office, which reducesoverhead for that RVP and creates a sense ofshared enterprise for the partner.

The requirement that our sales representativesobtain licenses to sell many of our products is ahurdle for our recruits. To minimize thisimpediment, we provide our new recruits withtraining opportunities such as test preparationtools and classes to help them become licensed,generally at no additional cost to them, andoffer financial incentives and recognitionprograms to encourage recruits to becomelicensed and to drive growth of our sales forcegenerally. We also have joined others in the lifeinsurance industry in seeking to address

unnecessary regulatory barriers to licensing,including efforts to modify individual statelicensing laws and regulations.

Sales Force Motivation, Training andCommunication

Motivating and training our sales force arecritical activities for our success and that of oursales representatives. We use multiple channelsto reach our approximately 95,000 licensedsales representatives to deliver motivationaland substantive messages.

Motivation. Through our proven systemof sales force recognition events and contests,we provide our sales representatives withincentives to engage in activities that drive ourresults. Motivation is driven in part by our salesrepresentatives belief that they can achievehigher levels of financial success by buildingtheir own businesses as Primerica salesrepresentatives. The opportunity to help othersaddress financial challenges is also a significantsource of motivation for many of our sales

representatives, as well as for our managementand employees. Our mission-driven andmotivational culture is, we believe, a majorreason that many sales representatives join andsucceed in our business.

We motivate our sales representatives tosucceed in our business by:

compensating our sales representatives to

reward product sales by them and theirdownline organizations;

helping our sales representatives learnfinancial fundamentals so they canconfidently and effectively assist ourclients;

reducing the administrative burden on oursales force, which allows them to devotemore of their time to building a downlineorganization and selling products; and

creating a culture in which salesrepresentatives are encouraged to achievegoals through the recognition of their salesand recruiting achievements.

We seek to motivate our sales representativesnot only through compensation, but also byproviding recognition for individual efforts and

achievements. We do this through incentivetrips, monthly promotion incentives and othertypes of performance recognition. Successfulsales representatives, as well as relatively newsales representatives who are beginning toachieve success in our sales organization, arerecognized on Primerica Online and in printmaterials that are distributed to our entiresales force. Additionally, many RVPs host theirown recognition events and create incentiveprograms that they sponsor for the salesrepresentatives in their downline organizations.

To give our sales representatives a sense thatthey are part of a larger enterprise than theirfield office, we conduct numerous local,regional and national meetings. These meetingsare a vehicle to inform and motivate our salesforce. For example, in January 2011 weconducted 12 regional meetings withapproximately 3,700 RVPs. We haveperiodically held a convention for all of oursales representatives, the most recent of whichwas held in 2007 at the Georgia Dome,attracting approximately 50,000 individuals.

Our next convention is scheduled to take placein June 2011, also at the Georgia Dome inAtlanta, Georgia. We believe the fact that somany of our sales representatives elect toattend our meetings at their own expensedemonstrates their commitment to ourorganization.



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Training. Our sales representatives musthold licenses to sell most of our products. Ourin-house insurance licensing center makesavailable classroom, online and correspondenceinsurance pre-licensing classes to meetapplicable state and provincial licensing

requirements and prepare recruits to passapplicable life insurance licensing exams. In2010, more than 62,600 students in 42 states,Puerto Rico and nine Canadian provincesattended approximately 5,400 classesconducted by over 500 instructors, many ofwhom are also sales representatives.Approximately 30,400 students in 43 statesand the District of Columbia attended onlinepre-licensing classes in 2010. We also offercorrespondence courses in 22 states and theDistrict of Columbia. For those representativeswho wish to sell our investment and savings

products, we contract with third-party trainingfirms to conduct exam preparation.

Because we believe that helping our newrecruits secure requisite licensing is a way forus to grow our business, we continue todevelop courses, tools and incentives to helpnew recruits become licensed salesrepresentatives. Among other tools, we provideto our sales force (generally at no cost to them)an online exam simulator, exam preparationreview classes in addition to state or provincemandated life insurance pre-licensing classes,and life insurance exam review videos. If newrecruits use our online exam simulator and passour practice exams, we agree to pay for themto take the state exam again if they do not passthe first time. We also developed the Fast StartScoreboard, an interactive tool on ourPrimerica Online website that provides newrecruits a step-by-step guide to getting startedin building their Primerica businesses, includingencouragement to use our licensing exampreparation courses and tools.

Other internal training program opportunitiesinclude sales, management skills, businessownership, product and compliance trainingmodules and videos designed to equip our salesrepresentatives to succeed in their businesses.Many RVPs conduct sales training in fieldoffices either on nights or weekends to allowsales representatives with weekday jobs orfamily commitments to attend.

Communication. We communicate with oursales force through multiple communicationchannels, including those described below:

Primerica Online, our Internet site for salesrepresentatives, is designed to be a supportsystem for our sales representatives. It

provides sales representatives with accessto their Primerica e-mail, bulletins andalerts, business tracking tools and real-timeupdates on their pending life applicationsand new recruits. It contains an extensivelibrary of Primerica-approved presentations,logos, graphics and audio and visual salestools, all of which can be easily downloadedby our sales representatives. ThroughPrimerica Online, we provide real-timerecognition of sales representativessuccesses, and scoreboards for sales force

production, contests and trips. PrimericaOnline also is a gateway to our productproviders and product support, a vehicle tomonitor production and track sales activityand a comprehensive training tool thathelps new recruits become licensed andstart building their businesses.Approximately 142,400 of our salesrepresentatives, both licensed and not yetlicensed, subscribed to Primerica Online atDecember 31, 2010. Sales representativesgenerally pay a $25 monthly fee tosubscribe to full-service Primerica Online,which helps cover the cost of maintainingthis support system.

Our in-house TV network is broadcast toour sales force by Internet-streamingvideo. Our full-service television studioallows us to create original broadcasts andvideos professionally and quickly. Thisvideo programming offers seniormanagement opportunities for weeklyupdates to our sales force, as well as avehicle for training and motivationalmaterials. We broadcast a live weeklyprogram each Monday hosted by our homeoffice management or RVPs that focuseson new developments and providesmotivational messages to our sales force,and each Wednesday we broadcast atraining oriented program to our sales



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force. We also profile successful salesrepresentatives in our programming,allowing these individuals to share theirsecrets for succeeding in our business. In2010, we produced 140 different shows orbroadcasts and produced 159 training and

motivational videos and audios. Our publications department and print

facility produce many brochures tomotivate and inform our sales force. Wemake available for sale to our sales forcesales pieces, recruiting materials, businesscards and stationery. We have a full-servicepublications department and a printing anddistribution facility that provides totalcommunications services from web designand print presentations to graphic designand script writing. RVPs receive a weekly

mailing from us that includes materialspromoting our current incentives, as wellas the latest news about our productofferings.

Our GoSolo voice messaging tool andmass texting allow us to widely distributemotivational and informational voicemessage, broadcasts and text messages toour sales force. GoSolo is a subscriptionservice provided by a third party to oursales representatives.

Sales Force Support and Tools

Our information systems and technology aredesigned to support a sales and distributionmodel that relies on a large and ever-changinggroup of predominantly part-timerepresentatives to assist them in building theirown businesses. We provide our salesrepresentatives with sales tools that allow bothnew and experienced sales representatives tooffer financial information and products to theirclients. Among the most significant of these

tools are:

Our Financial Needs Analysis. Our FNA isa proprietary, needs-based analysis toolthat is made available to our sales force.The FNA gives our sales representativesthe ability to collect and synthesize clientfinancial data and develop a personalizedfinancial needs analysis for the client that

is both understandable to the client andintegrated with product recommendationsthat meet the clients financial needs. TheFNA, while not a financial plan, providesour clients with a personalized explanationof how our products and prudent financial

practices, such as regular saving andaccelerating the repayment of high costcredit card debt, can help them reach theirfinancial goals. When preparing a FNA, oursales representatives collect key financialand personal data from their clients andinput it into our FNA software. Theresulting financial needs analysis providesclients with a snapshot of their currentfinancial position and identifies their needsin terms of financial protection (ourinsurance products), savings (our mutualfund, variable and fixed annuity and

segregated funds products) and debtmanagement (our loan products). The FNAenables the sales representative to presentfinancial alternatives to the client and is amulti-product sales tool.

Our Point-of-Sale Application Tool. Ourpoint-of-sale software, TurboApps, is aninternally developed system thatstreamlines the application process for ourinsurance products. This applicationpopulates client information from FNA filesto eliminate redundant data collection andprovides real-time corrections ofincomplete or illegible applications. Inaddition, the TurboApps application isreceived by both the home office and thesupervising RVP from the sales forceelectronically, which results in expeditedprocessing of our life insurance productsales. Integrated with our paperless fieldoffice management system describedbelow and with our home office systems,our TurboApps tool allows us to realize theefficiencies of straight-through-processing

of application data and other informationcollected on our sales representativesmobile devices. In 2010, we addedTurboApps functionality that supports ourrecruiting activity and our U.S. mutual fundproduct sales. We are currently developingweb-based versions of TurboApps to takeadvantage of the proliferation of portable



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devices and wireless Internet connections,including smartphones, laptop computersand tablets.

Virtual Base Shop. In an effort to ease theadministrative burden on RVPs andsimplify sales force operations, we make

available to RVPs a secure Intranet-basedpaperless field office management systemas part of the Primerica Onlinesubscription. This virtual office is designedto automate the RVPs administrativeresponsibilities and can be accessed by allsales representatives in an RVPsimmediate downline sales organization,which we refer to as his or her base shop.As of December 31, 2010, over 3,600 RVPshad activated a virtual office site.

Our Morningstar Investment PresentationTools. We have licensed from Morningstartwo web-based sales presentation tools,Portfolio Solutions and Morningstar

Hypothetical IllustratorSM. In addition, wehave contracted with Ibbotson AssociatesAdvisors, LLC, a leading asset allocationadvisory firm and a subsidiary ofMorningstar, to build detailed assetallocation portfolios for eight leadingmutual fund firms. These tools allow oursales representatives to illustrate forclients and prospective clients the long-

term benefits of proper asset allocationand the resulting wealth creation overspecific time horizons. We believe thesetools offer our clients and prospectiveclients the benefit of objective third-partyadvice from an industry leader and helpestablish the credibility of our salesrepresentatives and our products.

Client Account Manager. Together withMorningstar, in October 2010 we deployedClient Account Manager, a client portfoliomanagement tool that assists our salesrepresentatives with monitoring individualclient investment accounts. The ClientAccount Manager provides our salesrepresentatives with additional product salesopportunities for our investment and savingsproducts by providing better access todetailed account information for both activeclients and legacy accounts (i.e., accounts

that our representatives have inherited upondeparture of the representative whoestablished the accounts) to better servicethese customers, which allows our salesrepresentatives to have more client contact,to present additional investment

recommendations to clients and to cross-selladditional products.

In addition to these sales-related tools, wealso make available other technology tosupport our sales force in managing theirbusinesses and in serving our clients,including:

a toll-free sales support call center toaddress each sales representativesquestions and to assist withpaperwork, underwriting and licensingrelated to our insurance products;

a tele-underwriting process that allowsclients to provide us needed medicalinformation without disclosing it to oursales representatives, who are oftenfriends, family members and personalacquaintances;

our Primerica Online Internet site thatoffers our sales force the ability totrack the status of pending lifeinsurance applications using the LifeManager feature and track the

progress of their new recruits (interms of training and licensing) usingthe Recruit Manager feature; and

16 other websites to communicatewith, inform and assist prospectiveclients, clients, recruits, salesrepresentatives and employees.

Performance-Based CompensationStructure

Our sales representatives can earncompensation in multiple ways, including:

sales commissions payable based on theirpersonal sales;

override commissions payable based onthe sales by sales representatives in theirdownline organizations;



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bonuses and other compensation, includingshare-based compensation, payable tothem based on their own salesperformance, the aggregate salesperformance of their downlineorganizations and other criteria; and

participation in our contests and otherincentive programs.

Our compensation system is rooted in ourorigin as an insurance agency. Commissions tosales representatives with overrides to salesmanagers and general agents are common inthe insurance industry. Over time,modifications have been made to leverage theentrepreneurial spirit of our sales force.

Our compensation system pays a commissionto the selling representative who actually sells

the product and override commissions toseveral levels of the selling representativesupline organization. Commissions arecalculated and paid based on the commissionrates in effect at the time of the related sale.With respect to term life insurance sales,commissions payable are calculated based onthe total first-year premium (excluding policyfee) for all policies and riders. To motivate oursales force and help them offset the costs oftheir businesses, we compensate them for thesale of our term life insurance products as

quickly as possible after the sale. We advance amajority of the insurance commission upon thesubmission of a completed application and thefirst months premium payment. The advance, ifany, may be an amount up to 75% of the first-year annual commission, or generally on ninemonths of premium. As the client makes his orher premium payments, the commission isearned by the sales representative and thecommission advance is recovered. If premiumpayments are not made by the client and thepolicy terminates, any outstanding advancecommission is charged back to the salesrepresentative. The chargeback would equalthat portion of the advance that was made butnot earned by the representative because theclient did not pay the full premium for theperiod of time for which the advance was madeto the representative (i.e., nine months).Chargebacks, which occur in the normal courseof business, may be recovered by reducing any

amounts otherwise payable to therepresentative (such as advances on new salesor earned commissions on other sales).

The remainder of life insurance salescommissions is earned when the first 12 monthsof premium is received from the client. Sales

representatives and their upline organizationsare contractually obligated to repay us anycommission advances that are ultimately notearned due to the underlying policy lapsingprior to the full commission being earned.Additionally, we hold back a portion of thecommissions earned by our salesrepresentatives as a reserve out of which wemay cover these chargebacks. The amountsheld back are referred to as deferredcompensation account commissions (DCAcommissions). DCA commissions are available

to reduce debts owed by sales representatives.DCA commissions also provide an upline salesrepresentative with a cushion against thechargeback obligations of their downline salesrepresentatives. DCA commissions, unlessapplied to agent debt, are ultimately releasedto the sales representatives. Generally,commissions are not paid after the first yearwith respect to a policy. One of our ridersprovides for coverage increases each year. Forsuch riders, commissions in the second yearand thereafter are only paid with respect to thepremium increase related to the increasedcoverage. Additionally, renewal commissionsare paid on some older in-force policies. At theend of the policy duration compensation is paidon conversions.

We also pay compensation to our sales force forthe sale of mutual funds, annuities, loans, long-term care insurance, prepaid legal protectionand our Primerica DebtWatchers products, andfor the referral of customers seeking auto andhome insurance. For mutual funds and mostannuity products, commissions are paid both onthe sale and on the total of the assets undermanagement and are calculated based on thedealer re-allowance and trail compensationactually paid to us. Loan commissions arepayable for the sourcing of closed loans and arecalculated based on a fixed percentage of theloan amount. Long-term care insurancecommissions are calculated based on theamount of premium received. Prepaid legal



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protection program commissions and PrimericaDebtWatchers commissions are payable infixed amounts on the sale of the respectiveproduct. For auto and homeowners insuranceproducts, referral fees are paid for referrals thatresult in completed applications.

In addition to commissions paid on personalsales, we pay override commissions to severallevels of the selling representatives sales andsupervisory organization. This structuremotivates our sales representatives to growtheir downline sales organization and as aresult, drive product sales. To encourage ourmost successful RVPs to build large downlinesales organizations that generate strong salesvolumes, we have established the PrimericaOwnership Program to provide certainqualifying RVPs a contractual right to sell their

business to another RVP or transfer it to aqualifying family member.

Bonuses and, from time to time, other incentivecompensation are payable for sales of certainproducts. As of December 31, 2010, bonuseswere payable to the selling representative or toselected override levels, or both, for achievingspecified production levels for the sale of termlife insurance, investment and savings products,and prepaid legal protection and for auto andhome insurance referrals. In August 2010, weannounced a bonus program that provides new

representatives an opportunity to quicklyreceive rewards for successful performance. TheFast Start Bonus was designed to incentivize ournewest representatives to observe sales of lifeinsurance products by licensed salesrepresentatives, sell our other distributedproducts that do not require the salesrepresentative to hold a license, obtain their lifeinsurance licenses and recruit new salesrepresentatives. Upon achieving certain goalsand building their team, new representatives canqualify for a Fast Start Bonus by completingsuccessful field training observations andproduct sales milestones, while the upline RVPcan earn a bonus for each representative in hisor her downline organization that earns the FastStart Bonus. The Fast Start Bonus programreplaces a previous program under which newrepresentatives could not earn incentive bonuscompensation in their early months with thecompany.

In addition to these methods of compensation,we use quarterly equity award compensationprograms under which RVPs can earn shares ofcommon stock. Effective deployment of theseprograms allows us to align the interests of oursales force with those of our stockholders.

Sales Force Licensing

The states, provinces and territories in whichour sales representatives operate generallyrequire our sales representatives to obtain andmaintain licenses to sell our insurance,securities and mortgage loan products. Oursales representatives may also be required tomaintain licenses to sell certain of our otherfinancial products.

To sell insurance products, our sales

representatives must be licensed by theirresident state, province or territory and by anyother state, province or territory in which theydo business and in most states our salesrepresentatives must be designated by ourapplicable insurance subsidiary.

To sell securities products, our U.S. salesrepresentatives must be registered with theFinancial Industry Regulatory Authority(FINRA) and licensed as both Series 6 andSeries 63 registered sales representatives ofour broker-dealer subsidiary and by each state

in which they sell securities products. To sellvariable annuity products, our salesrepresentatives must have these licenses andFINRA registrations and be appointed by theannuity underwriter in the states in which theymarket annuity products.

Our Canadian sales representatives sellingmutual fund products are required to be licensedby the securities commissions in the provincesand territories in which they sell mutual fundproducts. Our Canadian sales representativeswho are licensed to sell our insurance products

do not need any further licensing to sell oursegregated funds products in Canada.

Due to the enactment and implementation by thestates of the Federal Secure and FairEnforcement for Mortgage Licensing Act of2008 (the SAFE Act), to offer mortgage loanproducts, our sales representatives must beindividually licensed as mortgage loan



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originators (and in some states as both mortgagebrokers and mortgage loan originators) by thestates in which they do business.

In Canada, our sales representatives do not sellloan products due to licensing restrictions, butthey are compensated for referring clients to

the lender without having to be licensed as amortgage broker.

Our sales representatives must pass applicableexaminations to be licensed to sell ourinsurance, securities and loan products. Weprovide our sales representatives access toin-person and online life insurance licensingexam preparation classes and other support toassist them in obtaining necessary lifeinsurance licensing. See Sales ForceMotivation, Training and Communicationabove. To encourage new recruits to obtain

their life insurance licenses, we either paydirectly or reimburse the respective salesrepresentative for certain licensing-related feesand expenses, if the sales representativepasses the applicable exam and obtains theapplicable life insurance license.

Supervision and Compliance

To ensure compliance with various federal,state, provincial and territorial legalrequirements, we and our RVPs share

responsibility for maintaining an overallcompliance program that involves compliancetraining, and supporting and monitoring theactivities of our sales representatives. OurOffice of the General Counsel and our FieldSupervision Department work with RVPs todevelop appropriate compliance proceduresand systems.

RVPs generally must obtain a principal license(FINRA Series 26 in the United States andBranch Manager license in Canada), as a resultof which they have supervisory responsibilityover the activities of their downline salesorganizations. Additional supervision isprovided by approximately 490 Offices ofSupervisory Jurisdiction (OSJs), which arerun by select RVPs who receive additionalcompensation for assuming additionalresponsibility for supervision and compliancemonitoring across all product lines. OSJs are

required to periodically inspect our field officesand report any compliance issues they observeto us.

All of our sales representatives are required toparticipate in our annual compliance meeting, aprogram administered by our senior

management and our legal and compliancestaff at which we provide a compliance trainingoverview across all product lines and requirethe completion of compliance checklists byeach of our licensed sales representatives foreach product he or she offers. Additionally, oursales representatives receive periodiccompliance newsletters regarding newcompliance developments and issues of specialsignificance. Furthermore, the OSJs arerequired to complete an annual trainingseminar that focuses on securities compliance

and field supervision.

Our Compliance Department regularly runssurveillance reports designed to monitor theactivity of our sales force. These surveillancereports are reviewed by our surveillanceadministrators. If we detect any unusual orsuspicious activity, our Compliance Departmentcommences an appropriate investigation and,when appropriate, refers such activity to ourlegal department for disciplinary action. OurField Supervision Department has a team ofPrimerica employees who regularly assist the

OSJs and communicate compliancerequirements to them to ensure that theyproperly discharge their supervisoryresponsibilities. These Primerica employeesalso periodically inspect the OSJ offices.

Our Field Audit Department regularly conductsaudits of all sales representative offices,including scheduled and no-notice audits. In2010, we performed approximately 4,800audits in the United States and Canada. Ourpolicy is to conduct approximately 50% of thefield office audits on a no-notice basis. Theauditors review all regulatory-required recordsthat are not maintained at our home office. Allcompliance deficiencies noted by the auditormust be corrected, and we carefully monitor allcorrective action. Field offices that fail theaudit are subject to a follow-up audit in 150days. Continued audit deficiencies areaddressed through a progressive disciplinary



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structure that includes fines, reprimands,probations and terminations.

The Office of the General Counsel hasresponsibility for the legal affairs of thecompany, along with compliance, governmentrelations and corporate governance. This office

is also responsible for investigating and makingrecommendations about disciplinary actionsagainst sales representatives, if appropriate.

Our Products

Our products are tailored to appeal to middleincome consumers. We believe our face-to-facehome delivery of products and financial needsanalysis add sufficient value to the client toallow us to compete on the basis of productvalue and service in addition to price. Reflecting

our philosophy of helping middle income clientswith their financial product needs and to ensurecompatibility with our distribution model, ourproducts generally incorporate the followingcriteria:

Consistent with Good Individual FinancePrinciples: Products must be consistentwith good personal finance principles formiddle income consumers, such asreducing debt, minimizing expenses andencouraging long-term savings.

Complementary: Products are designedto complement, not to compete with orcannibalize, each other. For example, termlife insurance does not compete withmutual funds because term life has no cashvalue or investment element.

Ongoing Needs Based: Products mustmeet the ongoing financial needs of manymiddle income consumers so that thelikelihood of a potential sale is high in mosthomes.

Distributable: Products must beappropriate for distribution by our salesforce, which requires that the applicationand approval process must be simple toexplain and understand, and the likelihoodof approval must be sufficiently high tojustify the investment of time by our sales

representatives.


8/3/2019 Request PRI2