Primerica executives acknowledged Tuesday that selling Medicare plans turned out to be tougher than they had expected — and that one reason is that the shift to remote work was not good for agent sales performance.
The Duluth, Georgia-based company is best known for selling term life insurance, annuities and related products to middle-market consumers through a large network of career agents.
It acquired e-TeleQuote, a Medicare plan distributor, last year in an effort to jump into the Medicare market in time for the Medicare Advantage and Medicare Part D prescription drug plan annual election period for 2022 coverage, which ran from Oct. 15 through Dec. 7, 2021.
Primerica paid $360 million for an 80% stake in the company, refinanced $150 million in e-TeleQuote debt, provided a $15 million seller’s note, and agreed to pay an additional $50 million if the business met performance expectations.
Primerica announced Monday, when it released earnings for the fourth quarter of 2021, that the 2022 annual election period sales were weaker than projected, and that it’s taking a $76 million charge for the quarter to reflect its new view of e-TeleQuote’s value.
Company executives gave more details Tuesday, when they held a conference call to go over the latest results with securities analysts.
Primerica had hoped to sell at least 36,000 Medicare policies but sold only about 32,000, and the ratio of lifetime policy value per approved policy was just 20% higher than the cost of acquiring each policy, according to CEO Glenn Williams.
Primerica had expected the average policy value to be 80% higher than the policy acquisition cost.
Alison Rand, the company’s chief financial officer, said projections show that Primerica is unlikely to have to pay the sellers of e-TeleQuote the $50 million amount linked to meeting performance goals.
The Reasons
Williams said Medicare market challenges included new Medicare program marketing materials approval rules that led to sales effort delays, consumers’ increased awareness of the need to shop for coverage, a higher level of competition, and Medicare plans that fail to meet consumer expectations and push a high percentage of enrollees back into the market.
One was working with outside lead-generation organizations.
“While we actively manage lead sources and mix, some sources proved less attractive than anticipated,” Williams said.