Greetings, and welcome to the Primerica Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Nicole Russell, Senior Vice President, Investor Relations. Please go ahead.

Thank you, Melissa, and good morning, everyone. Welcome to Primerica's third quarter earnings call. A copy of our press release issued last night, along with other materials relevant to today's call are posted on the Investor Relations section of our website. Joining our call today are our Chief Executive Officer, Glenn Williams; and our Chief Financial Officer, Tracy Tan. Our comments this morning may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. We assume no obligation to update these statements to reflect new information and refer you to our most recent Form 10-K filing as may be modified by subsequent Forms 10-Q for a list of risks and uncertainties that could cause actual results to materially differ from those expressed or implied. We will also reference certain non-GAAP measures, which we believe provide additional insight into the company's financial results. Reconciliations of non-GAAP measures to their respective GAAP numbers are included in our earnings press release. I would now like to turn the call over to Glenn.

Thank you, Nicole, and good morning, everyone. Primerica delivered solid earnings growth and generated strong cash flows during the third quarter of 2025, underscoring the resilience of our business model and consistent execution as our clients gradually adapt to economic headwinds. Our complementary product lines have proven to be a key advantage and powerful differentiator, while our sales force's commitment to serving middle-income families continues to set us apart. Starting with a snapshot of third quarter financial results. Adjusted net operating income was $206 million, up 7% year-over-year, while diluted adjusted operating EPS increased 11% to $6.33. We remain disciplined in our capital deployment strategy and returned a total of $163 million to stockholders through a combination of $129 million in share repurchases and $34 million in regular dividends during the quarter for a total of $479 million returned year-to-date. Looking more closely at our distribution results, both recruiting and licensing were down compared to the prior year period, which benefited from elevated post-convention activity. However, current levels remain healthy relative to historical trends in nonconvention years. During the quarter, more than 101,000 recruits became part of Primerica and nearly 12,500 people obtained a new life license, positioning us to end the year at around 153,000 life license representatives. This projection is slightly above last year's record level. Looking at our life sales results. During the quarter, we issued 79,379 new Term Life policies, down 15% year-over-year compared to record performance in the prior year period. Those policies contributed $27 billion in new protection for our clients for a total of $967 billion of in-force coverage. Productivity at 0.17 policies per rep per month was below our historical range, driven by a combination of lower life sales and continued growth of our life sales force over the last 12 months.…

Thank you, Glenn, and good morning, everyone. Our third quarter financial results were strong across all segments, giving us confidence that we're well positioned to end 2025 with solid year-over-year growth in both revenues and earnings. Starting with Term Life segment. Third quarter revenues of $463 million rose 3% year-over-year, driven by a 5% increase in adjusted direct premiums. Pretax income was $173 million compared to $178 million in the prior year period, down 3% year-over-year. Results during the quarter included a $23 million remeasurement gain compared to a $28 million gain in the prior year period. Excluding the impact of these remeasurement gains, pretax income remains largely unchanged. As required under LDTI accounting, we completed our annual review of actuarial assumptions and made certain changes to our long-term assumptions, which resulted in a $23 million remeasurement gain in the current period. And the largest portion of the gain was from mortality assumption change, reflecting favorable trends observed since the pandemic in addition to a positive experience variance from the quarter. As a reminder, the prior year period included a remeasurement gain of $28 million, primarily driven by an adjustment to our best estimate assumptions for the disability incident rate under our waiver of premium rider. Persistency remained stable on a year-over-year basis in aggregate, although lapses remained above our long-term LDTI assumptions. We believe that our clients are resilient over the long term and value our services and products. Based on historical trends, we expect persistency to normalize as clients adapt to the evolving economic environment. As a result, we did not make a change to our long-term lapse assumptions during the recent review cycle. Turning next to our key financial ratios. Excluding the impact of the remeasurement gain, the Term Life margin at 22% and the benefits and…

[Operator Instructions] Our first question comes from the line of Joel Hurwitz with Dowling & Partners.

Tracy, I just wanted to start with your last comments there on the planned capital drawdown from the insurance entity. Just can you elaborate on what you're expecting in the fourth quarter and then maybe going forward?

Yes. Good morning, Joel. Our capital position remains a very strong, particularly because of the excellent cash generation from our in-force block. And in the third quarter, we also had a really nice improvement on profitability from our statutory entities, and that's part of the reason why the RBC got higher. And from a cash generation standpoint, the continued strength of our profitability on the Term Life being consistent and being resilient is a big part of why the RBC ratio continued to be very strong. And as you know, that our ability to take the cash out of the life business is really based on the regulatory conditions as a limitation of how much you can take out as a percent of or limited by the prior fiscal year income. So we are taking maximum amount out as we speak. However, in the fourth quarter, we do have plans to increase that conversion from our insurance entities. The specific plan clearly will help us reduce that RBC ratio and while keeping a strong enough ratio above 400% to help support the growth. And as we continue to anticipate a growth for the long run for life insurance business, we know when the growth pace start to pick up, it's going to consume more cash because of how the cash flow is more front-loaded for a policy issuance. So that is part of our long-term plan. But for the fourth quarter, we have actions in place that could possibly include in the long run, looking at how dividend can be converted out, not excluding special dividend, but also including some other actions that we are putting in place to certainly increase that conversion rate. I hope that helps answer your question.

Yes. No, that's helpful. I look forward to seeing what you do in Q4. Maybe shifting for my second one, shifting to the term sales. Can you just help unpack, I guess, sort of what you're seeing and what you think the drivers of the weaker sales relative to your prior expectations? Is this all cost of living? Or are you starting to see other headwinds emerge that are impacting sales?

Joel, we think it's primarily cost of living and other general uncertainties. It seems like every day, there's something new about the future that's unknown that you thought you do the day before. And so it's -- as far as we can tell, it's all external. As I said in my prepared remarks. Obviously, we don't want to just be victims of the environment. We want to push back as hard as we can. So as we look at making our processes easier and faster, I had some conversations with some of our reps yesterday about the difficulties in the marketplace. And they're saying the conversations are taking longer. Clients are having to dig deeper into their budgets to reprioritize because their budgets are tighter. And so the discussions take longer. The decisions are harder for clients and we want to be able to work through that with them. We're not going to just say, okay, thanks, we'll check with you when things get better. And so that's part of the training process we were talking about earlier is to help our reps have those conversations with clients that can get them deeper into their budgets for prioritization, understanding the importance of protection in their family of putting in force and keeping in force. But there's still that uncertainty out there that has people in a wait-and-see mode in general. And I pulled our kind of an informal poll of a number of our reps that were in yesterday for a training session and said, how many feel like it's harder to make a life insurance sale this year than last year because of the economic and social circumstances around they all raised their hand. They said, life has gotten harder, investments for those clients that have money has gotten easier. And so I think what we're seeing is the result of the path of least resistance. And we've seen that before in our business when one line of business goes up and another one struggles a little bit, and then it turns around in future years.

Our next question comes from the line of Jack Matten with BMO Capital Markets.

First one on the ISP business. Just wondering if you could talk about the sustainability of these kind of strong sales growth levels. And certainly, the VA or RILA market has been a tailwind. But I also do think of you all is having some structural advantages given your kind of built-in customer base. I know you've been adding new products and funds. So just curious, bringing it all together, whether there's kind of like an underlying kind of growth rate we should think about over time?

Yes. As we look forward, Jack, we do -- we are pleased that we see the growth across the product lines. So we've seen strong growth of mutual funds, variable annuities, managed accounts, Canadian business and that breadth gives us -- adds to our confidence that this is a trend that probably has some legs. That said, a sudden turn in the market, a lot of discussion out there about is the market higher than it should be? Is the correction out on the horizon. Those are the types of things that can really turn this momentum around, again, far beyond our ability to control them. But the fundamentals of the breadth, the fundamentals that I mentioned in my prepared remarks of the demographics long term, we think there's true growth opportunities here. It might be a little choppier than it's been in 2025 if the market starts to reverse direction on us in a significant way or for an extended period of time. So I think we just have to keep that in mind, but the fundamentals are sound in that business.

Got it. Makes sense. And just a follow up on the cash flow outlook. I guess, are you suggesting that there is like the potential to have maybe like a structural improvement in your cash flow conversion ratio over time? Or were your comments more related just to this year where you've had better experience and so maybe more cash flow coming out and then it normalizes heading into next year?

Jack, so on cash performance, what I would comment about is the question in terms of cash conversion was more specific about cash conversion out of life insurance business to the holdco, where the RBC ratio is. I think we have plans in the fourth quarter to improve that conversion, even though that conversion is largely limited by the statutory requirement. We do have plans that could help improve that conversion. Now in terms of a long-term cash flow generation, I think we're very confident of the ability to generate very positive cash flow. First and foremost, is that our fee business has been really outperforming in terms of the ability to generate cash and that conversion continues to be very strong. And we have very good momentum on those fee business growth beyond just what the market normal growth rate is. And as we look at our growth rate on these businesses, we've been outperforming the market in the comparatives. So that generation has been very strong, and that gives us a very good long-term potential from the fee business cash generation when I look at -- in the longer term, when I'm looking at more 4, 5 year out. At the same time, our Term Life is an extraordinarily important business that produces very consistent strong cash flow because of how big the in-force block is and how consistent that business performs. If you look at the margins, it doesn't really vary all that much more than 200 basis points. So combined, our total business profitability is very, very sound at over 20%, if you look at the overall profitability. So the consistency, the resilience and our ability to just convert the cash from subs into holdco and our ability to return from holdco to the stockholders. I mean, we've been performing at around 79% -- 80% capital return to stockholders, which really is superior to the health and life performance. And you look at our conversion from our subs of insurance to our holdco is around 80% and some years higher possibly, and that's also superior to our peers. So overall, our cash performance has been fantastic. And that's why that's also part of -- in the long run, look at our ROE performance at $0.30 return on $1 of investment, that's also superior to many peers as well. So overall, we're confident about our ability to generate cash and our ability to return good amount of cash back to the stockholders in various ways.

Our next question comes from the line of Ryan Krueger with KBW.

I had a question on the 21% margin in the fourth quarter in Term Life. You had mentioned some higher investments. Can you elaborate on what you're doing there to start?

Yes, Ryan. So our -- yes, our Term Life performance has been relatively consistent. Really, when we look at the ratios, they don't really vary more than 50 basis points much at all. Some quarters, there is a little bit of a pattern, maybe higher than the other quarters due to just the spending patterns. So in terms of looking at the fourth quarter, we do have some activities of accelerated technology investments that will be continuously supporting our growth potential from the front end. And if you look at the overall ratio on the Term Life business, it's pretty steady. If I look at the benefit, I look at the DAC ratio and look at the expense ratio, they're very consistent overall on a total year basis to our guidance. And the margin for the year is going to be well over 22% as well for the total year. Now in terms of fourth quarter, we do believe that some of this acceleration is specifically targeted addressing our front-end productivity side of the improvement purposes that makes the rep journey easier, and that will continue to be a focus of ours to support the technology side of the improvement and the digital marketing and then the reps and the clients' experience. I hope that answers your question, Ryan.

Yes, it does. And then the follow-up was in the ISP business, your net fee rate has been kind of gradually trending up for the last several quarters. Is there any specific thing that's driving that? I know you are growing the managed account platform more, which I wonder if maybe that has slightly higher revenue rates. But is that -- can you give any color on what's driving that and if this trend may continue going forward?

Yes, Ryan, this is a great observation. I think certainly, on the ISP side, we do have a mix shift because of the client demand. And this is particularly driven by where the highest growth rates are. If you look at our -- the growth rate on managed account, it significantly outpaces most of the other categories and then variable annuity, as an example, also outpaces the other categories. All of those on a relatively basis, compared to mutual fund, they have higher from a margin and the variable side of the story, it's a little bit of a higher ending trend that pushes some of the improvement you see on the ISP business. Now again, as we talked about from previously when Jack even talked about the variable annuities there on the tailwind, I will say that some of this certainly has the impact of where the interest rate is that pushes people to try to capitalize on the opportunity to lock in higher rates. But secondarily, more importantly, is the demographic shift of people to Glenn's point, preparing for retirement as well as certain need to avoid the volatility possibly from equity market standpoint. All of those help push our good performance on the ISP rates and margins.

Our next question comes from the line of Wilma Burdis with Raymond James.

Do you guys expect any forward impact from the assumption review? And maybe you can just walk me through this a little bit, but how is the assumption review so outsized given the 90% mortality reinsurance?

Wilma, our assumption review in the third quarter generated $23 million of remeasurement gain. In relative terms, it is still a small percent when we consider reinsurance. And that's actually on the comparative speaking terms of size, if we didn't have reinsurance, this would have been several times bigger of an adjustment number. So looking at our overall mortality performance, we've been experiencing very good mortality for several years since middle of 2022. So we took a portion of that profit -- of that improvement and adjusted our long-term best assumptions. Now to your point, what the size would have been, well, without the reinsurance treaties and the size of that 90% YRT that we reinsure, this would have been several times larger of a number. So this $23 million total remeasurement gain in the third quarter is a very, very small percent in terms of what the size could have been. Hopefully, that helps answer the question.

Yes. And I realize you guys have given quite a bit of color on the Term Life sales. But I guess I'm just wondering what might change the trajectory of those sales. I've been looking at your recent surveys on households, and I'm not seeing that the trends appear sharply worse than they have in some of the recent results. So I'm just wondering if there's anything else that might contribute to the pressure that could potentially run off nearer term?

Yes, Wilma, you're right. Fortunately, we have seen kind of some flattening of the increases in cost of living. As we talk to our reps and our clients and survey them, we find that the cumulative effect is still causing some struggles. So while it's not getting worse as fast, it's not getting better very fast either. But we do believe that clients are adapting. Over time, people become accustomed to where they are. I'm not going to say they like it, but they become accustomed to it and learn to deal with it. And that's where we've often seen these types of pressures start to ebb some is after a period of time. But clearly, it's better if we can have household incomes really start to gain some ground. The prices aren't going to come down significantly, I don't think, but it's household income catching up that will help us get out of this. We are seeing some of that begin to happen. I think it just takes time to get some traction. And fortunately, we've seen this kind of dynamic in the past. So we believe, number one, it is a temporary situation and that we can take some actions to help clients work their way through it because we've seen it before. If you look at our history as an almost 16-year-old public company, we've had a number of years where we see this exact dynamic that recruiting and life insurances down and investments is up. We've seen other years where recruiting and life insurance is up and investments is down, and we've seen a lot of years, which is what we strive for, where everything is up at the same time. So it's not unprecedented by any means. It's probably a little more severe than we've seen in probably 15 years or so and taking a little longer to get out of it. And then I would say there are also what we've termed government policy uncertainties that other things in life that aren't directly financial, there's everything from the government shutdown. And we've got federal employees on furlough right now that are saying, well, let's wait until this is over before we make a buying decision. So there's just an unusual amount of uncertainty to add to the financial pressure. But again, we think it's temporary, and we eventually will get out of it, and we think we can take some actions to work through it and sort of turn the tide along the way.

Can I squeeze one more?

Go ahead.

Okay. Is there anything that you think is going to change near term for your customer base? So I know that there's some different tax impacts that are coming in next year. Is there anything like that, that you see on the horizon that could provide some relief?

Wilma, not anything that we have enough confidence in to count on. I mean we always keep our ear to the ground on the types of decisions that might be made at government policy level or taxation level that will be helpful for the middle market. And you're right, there are some discussions out there that might provide some relief and that kind of thing. We want to build a plan about what we can control. And then if we get some breaks that are beyond our control, it will just be icing on the cake. So we're not counting on those to turn the direction, but we do know there are all types of discussions going on because I think everyone recognizes the pressure that middle-income families are under. There's a universal agreement, I think, among all the divisions in our 2 countries where we do business right now is that middle-income families are under a significant amount of pressure. So hopefully, there would be some relief that would give us a tailwind.

Our next question comes from the line of John Barnidge with Piper Sandler.

Cost of living headwinds, I think the competition is clearly with space in your core customers' wallet. It's been talked about that rates are going lower -- it's also been talked about rates are going lower for seemingly longer time as well. But with the refinancing of a mortgage, when that does occur, how much on average do you save the consumer versus the average life policy premium?

I can give you some directional answers, John. I don't have the averages at my fingertips. We can maybe follow up with you on that. But you're exactly right. Another area of uncertainty is the direction of interest rates. I think the entire mortgage industry has been struggling with that for a while. We assume for a long time they were going to come down and then they did and they actually went the other direction. And I think that's common among all in that business. When we help a family refinance in addition to their mortgage, we are also looking at their consumer debt, which is generally at a much higher rate -- interest rate than their mortgage and trying to bring all that in together to maximize their savings. When we're able to do that, we also can adjust the term as needed to make things affordable or to accelerate, which is what we'd rather do, accelerate their payment. But generally, when we help a family on the mortgage side, it frees up more than the cost of a life insurance policy. And it actually can, where appropriate, not only provide them the funding for that, but also to get a systematic investment plan started. And that's the reason that we like that business. I've said many times, we get approached all the time by people product providers wanting us to load additional products into our distribution system and more products tend to cannibalize existing products. And so we're very resistant to that. I think the product that doesn't do that is a refinance of a mortgage where we can lower the average interest rate and pull in those consumer debts that are at high interest rates and high payments, and then we can get the clients on better financial ground. So that's one of the reasons that we think that business is important. As you know, it's a highly regulated business. So we've got a significant licensing process to take people through to enter the business. And then it's also highly regulated as you transact the business. So it's a more complicated and sophisticated business. And so it will move at a slower pace in our growth than us being able to add on Term Life Insurance representatives. But you've hit directly on why we love that business is because it does free up money for clients to get on a better financial footing.

My follow-up question, do you track the amount of sales maybe on Term Life in any given year to government employees? I'm just trying to get a size of how much your total addressable market is directly impacted by the shutdown in 4Q as the revised or the Term Life guidance for the year suggests acceleration in the decline of Term Life policies issued?

Yes, John, I wouldn't attribute the government shutdown specifically to a change or magnifying a change in the fourth quarter. I just use it as another level of uncertainty that we're dealing with. I mean we don't target government employees, but we cover a slice of the middle market that includes everything that's out there. And so there are government employees included in that. And it's just one more level of uncertainty that our reps have to deal with to get around. So I don't think it's the difference maker. It's just one more issue that I would add to the list. Again, I don't have the percentage of our clients that are government employees at my fingertips either. But I wouldn't attribute everything that happened in the fourth quarter to that. I would just say the uncertainty continues to be a headwind for us.

Our next question comes from the line of Dan Bergman with TD Cowen.

To start, I guess, it sounds like with the 50th year anniversary coming up, the next convention was pushed out to 2027 instead of the typical biannual pattern. In the prepared remarks, I believe you mentioned a number of field events next year instead. So just given that the convention typically drives outsized sales force and new business momentum, I was just hoping you could provide more color on your plans for next year and whether the events are expected to offset the lack of a convention. Just -- and I guess just with the -- will the timing of these events drive any change in your typical seasonal pattern of sales and recruiting as we look into next year?

Sure. You've read that exactly right. We moved the convention out for 2 reasons. One was it does coincide with our 50th anniversary being in '27. The other reason was because of the World Cup in 2026, you can't rent a stadium in the U.S. or Canada. And so it was convenient that it gave us a reason to push it out and have a payoff there that it does sync up with our 50th anniversary. But we do recognize the importance of those events and generating momentum and excitement and casting a vision for our business. So we certainly didn't want to go for another year in '26 without big events, but we also didn't want to compete with the '27 convention. It had to be big enough a plan to make a difference, small enough not to take anything away from the drive we have going already to the '27 convention. So working with our field leaders, we ran a play that we've run in the past. It's probably been more than a decade. But it's regional events, 5 locations, 3 in the U.S., 2 in Canada that will run in the spring, starting at the end of April for the first one, and we have one every week or every other week through the first week in June. So it's during the second quarter, it's a little earlier than our convention. That was intentional to give us more benefit during the year by getting them out there a little earlier. We wanted to avoid the kickoff of the year because we still do encourage all of our teams to have a big kickoff and engage quickly at the beginning of the year. We didn't want to step on that. We wanted to get beyond bad weather for…

Got it. Very, very helpful. And then maybe just following up on the earlier questions around the rise in your RBC ratio so far this year. Is there any way to break down the drivers further? I guess, specifically, how much of the improved capital generation has been due to strong in-force earnings versus less capital strains from the lower level of life sales? I guess what I'm trying to understand is if life sales do remain somewhat subdued for a period of time, could this allow for an ongoing outsized level of dividends for the holding company and ultimately, share repurchases to help offset this slower sales trends for a period of time. So any way to size that or how you're thinking about that would be great.

Dan, in terms of the RBC ratio being higher, obviously, one of the reasons is the higher profitability and income generated from the statutory side. Clearly, the statutory side of the cash impact is one of the reasons why RBC ratios are higher, but still primarily the reason is the overall ability to convert the cash out based on the regulatory restrictions of the 12-month rolling combined cash you can take out as an example, not exceeding prior statutory income. So as our income gets to be higher in the future period than the prior period combined, and you're limited to how much you can take out. So just by continually improving profitability on the statutory basis, as an example, there is a possibility of cash generating more than what your prior profitability combined would allow you to take out. That being part of the reason, we clearly are looking at the plans that we're going to putting in action in fourth quarter to help us be able to convert more cash out. And you will see when we get into the fourth quarter, how those actions take place. And to your point, the faster growth of the Term Life business will consume more cash than when it's at a slower pace. And that's part of the reason why when we look at the future rates that we want to keep for RBC, we always want to have a little bit of a cushion should when we get towards the 50th anniversary as the excitement starts to build and the momentum start to get stronger, we wanted to make sure that there is sufficient cash in place to capture that growth potential. Currently, we're on relatively lower growth speed compared to prior year because it was at such a record pace. But if you look at it on the longer 20-year term, 30-year term, our growth is still at pretty consistently good levels. Just the fact that last year was higher doesn't necessarily say the current growth is somewhat really unseen in the past. So that being said, that's part of what's driving our decisions on how much we keep in those entities and how much we take out. But in the long run, I think we have anticipation of keeping at relatively high historical level conversion. Some periods could even possibly exceed what we've seen historical ratios. But overall, I think we're confident and to keep at that very high-end performance in all the peer -- compared to all the peer sectors being able to continue that relatively predictable trend in terms of the ratios that we predict and use.

Our next question comes from the line of Mark Hughes with Truist Securities.

Excellent. The asset-based revenue, you point out that has been growing faster than the underlying [Technical Difficulty].

Mr. Hughes, it seems like...

Different categories. But is that -- should that sustain a positive trend?

Mark, we lost you for the entire middle part of your question. Would you mind restating?

Trend continue.

Mark, we're only getting 2 or 3 words out of that. I apologize. I don't know if you've got a bad speaker or what, but we're only hearing every other word or so of your question, so it's not coming through.

Yes. Can you hear me now, Glenn? Is this...

Yes, that's much better. Much better, much better.

Okay. All right. Appreciate that. Be a faster growth in asset-based revenue relative to assets, is there any reason that should -- that trend should not continue?

I think, as Tracy said, it's driven by product mix and our managed account business and then also the principal distributor model in Canada, which has similar dynamics. Both are kind of our -- some of our fastest-growing product lines. They're smaller. And so on a percentage basis, they tend to grow faster, but they're also beginning to catch up in the overall mix. So we would expect, barring some unforeseen disturbance that, that should have some legs and should continue. You're right. That direction is not something we anticipate would change.

Yes. And then, Tracy, the YRT ceded premiums, if you look at those relative to adjusted direct premiums, those have been moving up, that ratio has been moving up. What is the update on how that should trend over the next year or so? Will it just continue that upward drift? And again, this is YRT ceded premiums as a percentage of adjusted direct premiums in Term Life?

Mark, I think the YRT ceded premium as compared to the adjusted direct premium is because for those life policies, as the insured age, the ceded premium start to creep up to cover for the higher mortality risk. So when you look at it, you actually don't want to look at it in its silo. You want to add it to the -- actually the benefit cost. So when you combine those as a percent of ADP's relatively steady. That's how you want to look at it.

Our next question comes from the line of Suneet Kamath with Jefferies.

First question, just on the assumption update. Tracy, you had mentioned that you took a portion of the mortality or favorable mortality that you're seeing and put it through your assumptions. I'm not expecting a specific answer, but can you give a rough sense of like what proportion of the favorable mortality you put inside? Was it half? Was it 20%? Just a rough estimate would be helpful.

Suneet, so our mortality performance since 2024, middle of that year has been consistently favorable. We had thought that it was possibly a pull forward from the pandemic increased unfavorable mortality experience and that it would end at some point, but we continue to see that consistently. It's been reasonably good size of favorability. So we took a portion of it. In terms of what the proportion is, I think the theory really is that we believe our best estimate assumption is that we've taken the portion that we think for the long run, it's the best estimate on what the mortality experience would be in the long-term trend. So if we had thought that it needs to be higher, we would have taken it in our assumption review. So this is our -- truly our best estimate. In terms of what we could expect for the future, I would say that because we have had favorable experience possibly bigger than what we've taken, so it wouldn't be unlikely that we might have some favorable period claims and mortality favorable experiences from period to period. But long-term trend, we have taken our best estimate on what that trend would be.

Got it. And just -- again, I don't want to box you into a corner, but is it like 20%, 25% of what you'd expect -- what you think just more than half? Just trying to get a sense of size.

Yes. So that's a great question. The challenge really is there's a lot of complications of really deciphering the mortality performance on the cohorts and what that predictable trend, what cohort is a predictable trend for the long run. So I think that what our combined study looking at our experience really tells us this truly is the best estimate. So the future is uncertain. We believe that the portion we've taken truly represent what the long-term trend would be given our best estimate. So the period variance that we will experience, we'll continue to monitor and size that if that continue to be a pattern that we think becomes a long-term trend at that point, then we will recognize that if that were to come true.

Okay. That's fair. And I guess my second question, just on the annuity sales. So we've seen sales volumes increase for both you and the industry. Now some of that could be driven by just higher markets as essentially 401(k) rollover -- 401(k) asset balances are higher and so the rollovers are higher. So another way to think about growth would be growth in the number of contracts that you write. So I'm just wondering if you have any data on that. And then sort of relatedly, Glenn, do you think you're increasing the total addressable market for the annuity business? Or are you effectively selling products to the existing customer base, so you're seeing a lot of exchange activity? Any color on that would be helpful.

Sure. Don't have specific stats, but I can give you some directional answers on that, Suneet. The annuity business is attractive. Again, some of it is a demographic change. I think Tracy mentioned it in an earlier answer. The demographic direction, the aging demographics, people have accumulated some amount of money, and they are looking for ways to preserve that in uncertain times or expecting volatile markets down the road. And so the guarantees within variable annuities, the floors that are created and the guaranteed income coming out of them are what makes them attractive. And as we've said before, our product providers have done a great job in making those products as attractive as actuarially possible. So they've done well there. Changes in interest rates and their ability to provide those guarantees may be adjusted. So it's -- nothing is forever, but I think the product providers have done a good job of making their products attractive. I think our salespeople have used that to both help existing clients as well as be referred out to other clients. So we are seeing not only larger transactions, but increasing transaction volume. And we believe that's coming not only from our existing clients where we would be able to see a move if it was out of one of our products into a variable annuity, but we have existing clients who have assets elsewhere outside of Primerica that bring them to Primerica to join the other assets that we already have with them. We see some of that. And we see brand-new clients as well as those satisfied clients as happens throughout the industry refer us to others. So we're getting some of all of what you described, Suneet, that's driving that business.

Thank you. Ladies and gentlemen, this concludes our Q&A session and will conclude our call today. We thank you for your interest and participation. You may now disconnect your lines.