Why has the investment and savings business become an earnings pillar?

  • In the third quarter of 2026, pretax adjusted profit for the investment and savings products (ISP) business was 114 million dollars, above market consensus of 104 million dollars and Morgan Stanley’s estimate of 105 million dollars.
  • Revenue at the business grew 19% year over year, setting a record. Morgan Stanley attributed the performance to strong client demand and a favorable equity market environment, and said ISP is becoming more important to the company’s overall business.
  • During the quarter, ISP had inflows of 4.4 billion dollars and outflows of 4 billion dollars, for net inflows of 407 million dollars, above market consensus of 94 million dollars and close to the firm’s estimate of 404 million dollars.

Where is the pressure on term life coming from?

  • Term life pretax adjusted profit was 143 million dollars in the third quarter, below market consensus of 151 million dollars and Morgan Stanley’s estimate of 147 million dollars, due to an increase in other ceded premiums.
  • Monthly agent productivity fell from 0.18 in the second quarter to 0.17, also below market consensus of 0.18. Morgan Stanley noted that overall agent growth and monthly productivity continue to fall short of expectations.
  • The company recruited 91 thousand people during the quarter, above the firm’s estimate of 89 thousand people but below market consensus of 106 thousand people; newly licensed agents totaled 11 thousand people, also below consensus of 12 thousand people.

How does Morgan Stanley view the outlook?

  • The firm’s investment thesis for Primerica is to leverage the term life business’s established sales network and improve ISP profitability. Sustaining strong ISP performance and further improving agent productivity will be key.
  • Morgan Stanley gives the company an Equal-weight rating and a price target of 316 dollars; its sum-of-the-parts valuation values the term life business at 8.3 times its forecast earnings per share for 2027, and ISP at 11.7 times earnings.