Good morning, and thank you for attending today's Primerica's first quarter 2022 earnings webcast. My name is Austin, and I'll be your moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you'd like to ask a question, please press star one on your telephone keypad. I would now like to pass the conference over to our host, Nicole Russell, Head of Investor Relations. Nicole, please go ahead.
Thank you, Austin, and good morning, everyone. Welcome to Primerica's first quarter earnings call. A copy of our press release, along with materials that are relevant to today's call, are posted on the investor relations section of our website. Joining our call today, our Chief Executive Officer, Glenn Williams, and our Chief Financial Officer, Alison Rand. Glenn and Alison will deliver prepared remarks, and then we'll open the call for your questions. During our call, some of our comments may contain forward-looking statements in accordance with the safe harbor provision of the Securities Litigation Reform Act. The company does not assume any duty to update or revise these statements to reflect new information. We refer you to our most recent Form 10-K 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 operations. Reconciliations of these non-GAAP measures to their respective GAAP numbers are included at the end of our press release and are available on our investor relations website. I would now like to turn the call over to Glenn.
Thank you, Nicole, and thanks everyone for joining us. Primerica's results in the first quarter reflect the ongoing middle market need for our financial solutions and the strength of our business model. As the post-COVID business environment continues to emerge, our methods are evolving and our mission remains unchanged. We're seeing strong response to our business opportunity and recruiting numbers that remain elevated compared to pre-COVID levels, although down from their peaks during the last two years. Our efforts to improve licensing pull-through are beginning to show results, pushing our licensed sales force number above 130,000 once again. Results for term life insurance sales and investments are normalizing on slightly different tracks, yet both remain above pre-COVID levels. Results indicate that our mission to serve the financial needs of middle-income families is more important than ever.
As we look more closely at our financial results, the resilience of our business model is clear. Our main lines of business continue to deliver solid results despite the unknowns of the post-pandemic environment. While our newly acquired Senior Health business presents an area where more work is still needed. As we continue to transition to a more normalized operating environment, we are experiencing a temporary period of elevated costs in certain operating expenses. Alison will expand on this trend in her prepared remarks. Starting on slide three, adjusted operating revenues of $693 million increased 9% year-over-year as both our core Term Life insurance and investment businesses benefit from 2+ years of strong sales and robust equity market appreciation.
Diluted adjusted operating income per share of $2.11 fell $0.33 compared to last year's first quarter due to a $0.37 loss in our newly acquired Senior Health business and temporarily elevated overall operating expenses. Turning to Slide four, recruiting remains quite strong versus pre-pandemic levels, with nearly 85,000 new individuals joining Primerica during the first quarter of 2022. Throughout most of 2020 and 2021, recruiting incentives were heavily used to maintain momentum. Now, as we emerge from the pandemic, we are shifting to more focused use of recruiting incentives. Adding to the recruiting momentum is the record performance of our independent sales force leaders during the last two years, which has created a compelling recruiting message and given them the confidence to share this message more often.
Recent shifts in labor markets have further amplified the attractiveness of our business model with its flexibility in setting work hours and earnings potential. Our efforts to drive licensing are starting to gain traction. Despite a slow start in January, we saw meaningful improvements in February and March. In total, nearly 10,000 individuals were licensed during the quarter, including 4,000 new life license reps in March alone. Strength in new life license reps continued in April with another 4,000 new licenses added. As we approach our convention at the end of June and the beginning of July, we anticipate a lull in recruiting and licensing activity during the two weeks around the event due to time out of the field. Post-convention, we expect high activity levels during July.
The combined recruiting and licensing momentum supports our ability to continue to grow the size of the sales force beyond the current 130,000 reps. Based on current trends, we believe the sales force could grow slightly above our prior full year 2% estimate. Turning to slide five, we continue to see solid demand for protection products with more than 71,000 policies issued during the first quarter, which compares favorably to the 2019 pre-pandemic period. Although we saw a decline in the number of issued policies compared to the first quarter of 2021, estimated average annualized issued premium per policy increased by 2% year-over-year and face amount in force ended the quarter at a record $910 billion.
We believe that COVID has had a longer term impact on our target market by renewing their awareness of the value for protection products. While second quarter sales volumes are expected to be down around 10% year-over-year, they should remain 4% or 5% above 2019's pre-COVID levels, and we expect continued strength in average premium per policy. On slide six, sales of investment products remained strong at $3.1 billion during the quarter, and net inflows of $1.2 billion continue to reflect our clients' long-term approach to investing. However, momentum during the quarter has clearly shifted as market volatility eroded investor confidence. We continue to see slowing sales in April while redemption activity remained normal. Market volatility and economic uncertainty make it difficult to predict sales levels for the second quarter.
Our best estimate is that second quarter sales will be down around 7% year-over-year, making our full year projections roughly in line with 2021. Turning next to e-TeleQuote in the Senior Health market on slide seven. We made progress in reducing contract acquisition costs during the quarter. However, policy churn during the January 1 annual renewal cycle was much higher than expected, particularly for the 2021 cohort. This, combined with refinements in our prediction models that Alison will discuss later, led to a $19 million negative tail adjustment in the quarter. We believe policy churn has been largely driven by increased advertising and policyholder shopping and switching plans. Many of our competitors have indicated that they are pulling back on growth at any cost, which should help reduce churn.
Our carrier partners continue to recognize the importance of brokers like e-TeleQuote, which account for approximately half of our key carrier partner Medicare Advantage sales. The level of marketing development funds we received from carriers in the first quarter increased year-over-year. We recognize that LTVs have declined, and that we must adjust our operating expenses and consider process enhancements to better retain clients. As a result of this, we're going to continue to limit sales volumes for 2022. e-TeleQuote agent recruiting has improved, and we are not having any difficulty recruiting agents in this market. Our pullback in recruiting has been intentional as we work to stabilize and improve results in our Senior Health segment. We continue to make progress in lead sourcing and productivity, driven by improved marketing spend strategies and data science.
We expect pressure on contract acquisition costs in the second and third quarters due to seasonally lower lead generation or lead conversion rates as the ability for individuals to purchase these products during these periods is lessened. By the time AEP occurs in the fourth quarter, we plan to have emerging processes around lead acquisition and conversion, as well as policyholder retention in place to drive profits into 2023. We also believe that Primerica can be an important source of leads for e-TeleQuote. Early indications are that approved policies that were referred by a Primerica rep have favorable early persistency and higher expected LTVs. We recognize that we have a lot of work ahead, and we continue to believe that the business can generate acceptable stockholder returns over the long term. We are working diligently to change the momentum and growth trajectory of the business.
Finally, our mortgage business continues to gain traction as we expand into more states with the addition of Arizona and Hawaii, bringing the number of states in which we're currently doing business to 19. The recent increase in interest rates is significantly pressuring refinance activity. However, we continue to see good demand for debt consolidation and purchase money mortgages. Our sales force is uniquely positioned to identify opportunities to help clients consolidate and manage debt. With that, I'll now turn it over to Alison.
Thank you, Glenn, and good morning, everyone. Our financial results for the quarter continue to reflect revenue growth in the Term Life and Investment and Savings Products segment, which have benefited from strong sales and persistency during COVID, as well as favorable equity markets. Both segments experienced lagging pre-tax income growth, with elevated insurance and operating expenses being a key factor. Additionally, the Senior Health segment continued to be pressured by increased churn, resulting in a loss being recognized for the quarter. Let me now expand on each of these earnings drivers. In the Term Life segment on slide eight, operating revenues of $418 million increased 10%, driven by a 10% increase in adjusted direct premiums. Pre-tax income grew 4% as year-over-year trends were negatively impacted by normalizing persistency and elevated insurance expenses.
Starting with persistency, we continue to see policy retention normalize as COVID fears subside. The business issued in the first year of the pandemic, which is now in its second duration, has demonstrated weaker performance this quarter. This is not particularly surprising as the business was issued in the height of the pandemic. Persistency for policies issued in the last 12 months is trending in line with pre-pandemic levels, as policies issued prior to the pandemic continue to see very strong persistency, with lapses around 20% lower than pre-pandemic levels. DAC amortization is most sensitive to lapses in the early durations, and as such, the persistency levels experienced this quarter resulted in the DAC ratio rising to 15.3% from 13.3% in the prior year period.
Note that the current DAC ratio remains stable compared to our pre-pandemic range of approximately 15% for the first quarter. On a year-over-year basis, the net impact of persistency on pre-tax operating income was minor, as higher DAC amortization was largely offset by continued adjusted direct premium growth and lower benefit reserve increases. Turning to mortality, the quarter experienced net COVID claims of $16 million, which was $5 million less than the prior year period. Over half of the quarter's COVID claims were in January, with the level steadily decreasing throughout the quarter. Assuming no new strains emerge, we expect net COVID claims of around $3 million for the second quarter. Unlike recent quarters, we did not see notable levels of excess claims for reasons other than COVID.
As a result of lower excess claims and to a lesser extent, normalizing persistency, the benefit ratio declined to 62.1% from 63.9% in the prior year period. From an operating margin perspective, the higher DAC ratio and lower benefit ratio generally offset one another. The 100 basis point year-over-year deterioration in operating margin to 16.4% was driven by a 23% increase in insurance expenses. The increase is largely due to adding the previously postponed biennual convention to our normal schedule of sales force leadership events for 2022. I will discuss this and other drivers of expense growth later in my remarks. As we look to the second quarter, we expect adjusted direct premiums to grow around 9%.
The second quarter has historically had the strongest persistency, so assuming this seasonality and continued normalization of losses, we estimate the second quarter DAC amortization ratio will be 13.5%-14%. Assuming we incur the $3 million of COVID-related net death claims, we estimate the second quarter benefit ratio to be around 59.5%. Insurance expenses are expected to be elevated in the second quarter as well, as I will discuss further later in my remarks. All in, we expect the term life operating margin to be between 20%-21% in the second quarter. Turning next to the investment and savings product segment on slide 9, operating revenues of $241 million increased 8%, while pre-tax income of $65 million increased 2%.
Sales-based revenues increased 5%, largely in line with the growth in revenue-generating product sales, while sales-based commissions expenses increased 9%. The increase in commission expense year-over-year reflects the higher level of sales force bonuses implemented in 2021 in recognition of outstanding sales performance. At 1.16% for the quarter, sales-based net revenues as a percentage of revenue-generating sales is consistent with the 2021 full year rate of 1.18%. Asset-based revenues and asset-based commission expenses increased 12% and 14% respectively, generally in line with the increase in average client asset values. Both the first quarters of 2021 and 2022 included an acceleration of DAC amortization as a result of unfavorable market performance on Canadian segregated fund client asset values.
The current period included a $1.8 million increase in amortization, whereas the prior year period included an increase of about $900 thousand. Turning to the Senior Health segment on slide 10, we recognized a $19 million negative tail revenue adjustment on policies approved in prior periods. Heading into the year, we expected the January 1 renewal cycle for previous year cohorts to demonstrate weakness, but given the level of uncertainty, we waited until the commission payments came in from carriers during the first quarter to make further tail adjustments. The tail adjustment was also driven by continued refinements to the algorithmic model that predicts expected renewal commission collections.
We have adjusted the model to overweight persistency trends of recent cohorts and believe this approach minimizes significant negative tail adjustments in the future, though we could still have some additional smaller adjustments over the next few quarters. We are also looking at how to adjust our revenue forecasting model and persistency curves to properly reflect the rising level of existing policyholders who switch plans but return to us to facilitate the change. We are monitoring the results of the business carefully to identify trends as early as possible. The heightened renewal churn and an increase in the revenue constraint to 10% to reflect the level of collection uncertainty led to lower LTVs being recognized in the quarter for newly approved policies.
While still too early to see a change in renewal patterns for 2021 AEP business, initial paid rates on the block were in line with expectations and modestly improved from prior year results. We were also able to reduce contract acquisition costs per approved policy from fourth quarter levels with reduction effort, with the reduction efforts continuing, as Glenn mentioned earlier. There is significant seasonality within the sector and we expect pre-tax losses in the second and third quarters in the range of about $10 million per quarter, with profits in the $5 million range for Q4. Importantly, we believe the actions we are taking set us up for much stronger financial performance in 2023.
With the lower anticipated agent counts and improved productivity, we expect negative cash flows to be at the lower end of the range of our prior guidance of $10 million-$15 million, inclusive of the net operating loss and operating loss tax benefits recognized at the PRI level. In the corporate and other distributed product segment, the adjusted pre-tax operating loss of $28 million increased $4 million year-over-year. The increased loss was driven by $3 million lower allocated net investment income due to a higher allocation of NII to the Term Life segment to support the growing block of business. Pre-tax operating earnings on other distributed products were down about half a million year-over-year as well.
Consolidated insurance and other operating expenses on slide 11 increased $23 million or 19% year-over-year, about $8 million of which was tied to the Senior Health segment that did not exist in the prior year period. The components of the remaining $15 million or 12% increase were as follows. About $6 million was driven by higher costs associated with in-person sales force leadership events. As we noted last quarter, we expect full year 2022 expenses to be about $9 million higher than the prior year, prior years, given that we've gone back to our in-person events and additionally, we'll hold the previously postponed biennial convention in June this year. The elevated expenses will be recognized in the first half of 2022, with expenses associated with sales force leadership events generally being flat year-over-year in the second half.
Expenses associated with sales force leadership events will return to historical levels in 2023. Approximately $4 million was driven by growth in our business, including higher pre-licensing related costs as in-person classes resume to normal levels. Approximately $2 million was related to higher employee-related costs from annual merit increases, which were somewhat offset by a high level of open positions. The remaining $3 million related to various items, including higher employee travel, given the lifting of COVID travel restrictions this year. Looking ahead, we expect second quarter insurance and other operating expenses to again be elevated, increasing about $25 million or 22% year-over-year. $8 million of the elevated increase is tied to the Senior Health segment that did not exist in the prior year period and $4 million is driven by the catch-up of in-person sales force leadership events just discussed.
The remaining increase is generally driven by the same recurring factors noted for first quarter. We expect year-over-year expense growth to slow significantly in the second half of 2022 as the frequency of sales force events returns to normal and Senior Health operating expenses are reflected in both years. On a year-over-year basis, third and fourth quarter insurance and other operating expenses are expected to increase by about 9% and 5%, respectively. Turning next to slide 12. The invested asset portfolio remains well diversified with an average rating of A and a duration of 4.9 years. During the quarter, significant increases in interest rates led to an unrealized loss in the portfolio of $84 million, compared to an unrealized gain of $81 million at December 31, 2021. As interest rates have continued to rise in April, fixed income prices have continued to decline.
We believe the declines are predominantly interest rate driven and not a result of significant credit concern. We also believe we have plenty of flexibility in the portfolio and have the ability to hold investments until maturity as necessary. The increase in interest rates has allowed for more attractive investment opportunities. The yield on new purchases for our life companies during the quarter averaged 3.5% for quality of double A minus, compared to 2.6% in the prior quarter. While it will take some time to reverse the impact that years of low interest rates have had on the portfolio book yield, we are optimistic about the better buying opportunities that we're seeing. Finally, on slide 13, invested assets and cash at the holding company remains very strong at $250 million.
Primerica Life Insurance Company's statutory risk-based capital ratio was estimated to be about 440% as of March 31, 2022. During the quarter, we repurchased $99 million of our common stock, which, when combined with the $19 million purchased in December, leaves about $207 million remaining of our $325 million program to be completed this year. We continue our work towards the implementation of targeted improvements to the accounting for long duration contracts, or LDTI, which will go into effect in 2023. We still plan on providing an estimate of our preliminary adjustment to the balance sheet and other qualitative information when we report second quarter results in early August. With that, operator, I'll open the line up for questions.
Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, it is star one. If you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question is from Ryan Krueger of KBW. Ryan, your line is open.
Good morning.
Hi. Thanks. Good morning. Hey, good morning. My first question was on the Senior Health outlook. Appreciate the updated commentary on the rest of the year. I guess, how are you at this point thinking about how this could translate into earnings as we move to 2023?
I'll start with that and Glenn, if you want to fill in any commentary, that'd be great. At this point, we haven't done full projections for 2023 because quite frankly, we're evaluating all the steps we're taking this year to see what will happen. Being optimistic that these changes that we're making will take and will help grow the business. We would then look next year to start growing the sales volumes again. You know, this year, as Glenn has said, we're very specifically holding back on volumes as we look through the operating model.
One thing we want to make sure we do is constrain the cash that we put towards or the capital that we put towards this business until we feel more comfortable that the operating model is one that we think is a good solution for the future. At that point, once we're comfortable, we feel much better about putting more capital into the business, which it will take to grow the business. You know, as we all know, this is a business where the commissions come in over time, but all the real acquisitions are largely front-end loaded. Again, we're being very cautious about doing that this year.
As we see successes in our various approaches towards improving churn, improving relationship with the client, reducing contract acquisition costs, we'll sort of put our foot back on the accelerator and take it off the brake to grow it. As we progress through the year and see traction on our efforts, I will provide further insights into 2023.
Yeah, I agree. I think it's a very deliberate process, and so Alison just described it very well.
Thanks. On Term Life sales, I guess, how are you thinking? I think you commented that in the second quarter, you expect a 10% year-over-year decline. How are you thinking about momentum as you move to the back half of the year after you have the convention?
Yeah, I think we'll have some positives, Ryan, in the comparisons. We've got, you know, less significant performance last year to compare to and some pretty positive momentum going this year. I think you see those comparisons improving as we go throughout the year. I think the convention will be helpful. The types of announcements we make at the convention are designed to try to increase excitement and productivity. You add that to the, you know, less aggressive growth from previous year and I think you get some continued improvements in the comparisons as the year progresses.
Thank you.
Thank you.
Our next question is from Daniel Bergman of Jefferies. Dan, your line is open.
Go, Dan.
Good morning.
Hi. So your prepared remarks on Term Life persistency were really helpful. I just wanted to see if you could provide a little more color on what you're seeing in that block of policies issued in the first year of the pandemic that it sounded like drove the weakness. I apologize if I missed it, but yeah, any color on how persistency on that cohort of policies compared to, you know, typical levels for pre-pandemic vintages? Is there any risk we could see a similar trend emerge in the more recent vintage of policies, you know, issued later on in the pandemic? Just any color on what you're seeing and kind of how the blocks are performing would be great.
Sure. It's interesting when we first entered the pandemic and sales levels skyrocketed, a lot of our commentary and you know, our question was, how is this block of business going to be performing? We knew that some of it was purchases happening straight out of fear, and there was likely to be some level of weakening persistency on that block. I didn't give the exact numbers in my prepared remarks, but I can share them now. On that block of business that's in its second duration, I'd say it's about 5% worse than what we typically would have seen on a second duration block pre-pandemic.
While it is certainly not performing as strongly as historical trends, it's not that far off that I have too much concern about it becoming a real issue across the board. I would say on the first year persistency, it's still actually favorable to pre-pandemic levels. Given that a lot of those policies were purchased sort of a little bit later in the cycle when I don't want to say COVID became an everyday phenomenon, I don't want to say that lightly, but where it became more a routine thought in people's lives, you know, I feel a little bit more confident that that business will perform. Again, it is currently performing better than pre-pandemic first duration policy.
Even if it weakens a little bit, it, you know, would still land pretty much in line with the historical trends. All in all, I'm actually very pleased with what we're seeing. I do think it's interesting to look at the policies that are in their third duration or later. You know, those are policies that were issued prior to the pandemic. Just across the board, we're seeing, like I said, 20% better persistency. The people who prior to the pandemic, you know, understood the need for insurance still absolutely understand the need and in fact, are holding onto their policies even longer than before. All in all, we think it's pretty positive.
Got it. That's really helpful. Thank you. I just wanted to see if you could provide some more detail on the outlook for recruiting. Just curious if you're seeing any impact from the tight labor market and wage inflation on your ability to bring in new recruits. I believe in the prepared remarks, you mentioned some changes in recruiting incentives. Just wanted to see if you could expand on that initiative.
Sure. I'd love to, Dan. Yeah, the comments on recruiting incentives would indicate it as we were coming into and coming out of the pandemic, which, you know, completely unknown, uncharted territory, we were using recruiting incentives pretty heavily because you might recall before the pandemic started, we had a momentum surge going or feeling good about our business in late 2019 and early 2020. As we thought the pandemic might be short at one time, we said, let's try to bridge that and continue the momentum. We were aggressively using incentives and discounts, and then we continued to do that as the pandemic lengthened.
Now we're finding the fundamental strength in our business, and we're pleased with it, and so we're easing back on the more significant incentives and using, you know, more normal incentives, kind of regular things, a little extra credit on a leadership event and that kind of thing that's not nearly as leveraged. What we're doing is we're kind of weaning ourselves off of all of those really impactful recruiting incentives. What we're finding is very strong fundamentals in our recruiting business. That was the nod toward a more focused use of incentives now. We believe in looking at our numbers, you've got more fundamentally sound numbers because they're not being as influenced by incentives as they were in previous years.
Now more specifically to your question about, you know, what we're seeing in the market, as I said in my prepared remarks, you know, nothing gives us recruiting momentum like success of our business model. While we certainly need to always be conscious of the, you know, the tremendous loss of the pandemic, it did drive productivity. It drove success of our field leaders and their incomes. We've got a strong recruiting message that we've got a great opportunity. It performed well in difficult times. We're kind of at our highest levels ever of sales productivity and compensation. That creates a strong recruiting message, and it also creates the confidence for our leaders to tell that message more often. When it's a good message, you share it more frequently.
We're seeing all of that, we believe, in the fundamentals that are strong and longer lasting. Particularly the tight labor market, you know, it's got a lot of you know, conflicts and kind of contradictions built into it. What helps us is when people are frustrated with their current jobs, don't believe they have the opportunity, don't believe they have the flexibility, and so forth, that's when they look for alternatives, and that's when we show up on their radar very frequently. We're seeing a lot of interest in our opportunity as people move between careers or look for the things that we offer in our opportunity. That's a positive. We're not seeing a lot of headwinds from the tightness in the labor market because, you know, we're not offering a job.
We're offering an opportunity that it takes a fairly extended period of time to build. That tends to attract frustrated employees, not those that are in the hunt for a brand-new job this week. We're not as susceptible to kind of swings in the tightness of the labor market. If it were extraordinarily tight for a period of years, you know, it might turn into a headwind, but we're just not seeing that right now.
Got it. That's really helpful. Thank you.
You're welcome.
Our next question is with Mark Hughes of Truist. Mark, your line is open.
Good morning, Mark.
Yeah, thank you. Good morning. Good morning, Glenn. Alison, the Term Life margin, the 20%-21% operating margin in 2Q, pretty strong. How does that trend over the balance of the year if we get more normalization in these factors, the benefit ratio, maybe DAC normalizes a little bit more? Is that a good level to think about, or would more normalization be maybe a little higher, a little lower?
No, the second quarter is traditionally our strongest margin quarter. Historically, persistency is very good in the second quarter, which obviously brings down that DAC ratio, you know, from a seasonality perspective. I do expect the second quarter to be a little bit elevated. As a slight offset to that, you know, you do have the higher operating expenses that I was mentioning earlier. I believe last quarter we gave the guidance that we thought we'd be around 20% for the full year, and at this point, we're not changing that.
Okay. Glenn, you were, I think you talked about a 10% year-over-year decline in new policies issued. Was that for 2Q?
Yes, that was just for 2Q.
2Q. I think you said as the year progresses, you would see those numbers improve or
Yeah.
You know, get marginally better.
That's correct. Quarter by quarter, we expect that difference to be smaller and become more in line with last year.
Okay. I think that's it for me. Appreciate it. Thank you.
Sure. Thanks, Mark.
Our next question is with Andrew Kligerman of Credit Suisse. Andrew, your line is open.
Good morning. Question on the rep count. Historically, when you've had these biennial conferences, what kind of a boost does it give you in subsequent quarters to rep count? What's kind of been a historic boost level? With that said, I think you've been saying, you know, in the back half of the year, you could see a very low single digit year-over-year pickup in your rep count. Is that still the trajectory?
Yeah, Andrew, we are seeing some success in our pull-through rate, as I mentioned in my remarks. We're a little more optimistic now than we were last quarter, and I think I made a comment to that effect in my prepared remarks. What we see around the convention in years gone by, we saw significant differences. I'm talking about over, you know, the period of the last 10 years in momentum before convention and after convention. We really didn't feel like that was a healthy dynamic. We worked very hard to have, you know, the maximum momentum before the convention and better momentum coming out, but not a huge difference between the two. I think we've succeeded in that over the years.
You're not gonna see night and day difference in the first, the second quarter versus the third quarter, the first six months versus the last six months. However, we do make announcements at the convention and run incentives coming out of the convention. What you're likely to see, as I mentioned in my remarks, is as everybody comes out of the field, including travel for a period of a week to 10 days to attend, you see a little lull in all activity around the event itself. Based on the announcements we make and the excitement we generate and the vision we cast for the future at the event, you see some pretty strong momentum immediately after the convention.
To your sales force size question, what we would expect is strong recruiting coming out of the convention. That's usually what we see, and we play into that because the recruiting dynamic with incentives is probably the easiest one to move. One of the reasons we've worked so hard on our licensing pull-through, and one of the reasons I'm glad we're seeing positive impact of that now is because we need that in place so that when those large numbers of recruits come in, we're prepared to deal with them and try to get a reasonable pull-through rate of the recruiting surge that we would expect, you know, after an event. All of that nets out to improving our net sales force size and growth. You know, you don't see the growth in the numbers.
The licensing process is, you know, a one month to a four month process, and in some provinces in Canada, even longer than that. It's not something you see immediately after the event. In the second half of this year and into the first half of next year, you would expect to see the strong recruiting front end of the pipeline and the good pull-through we're experiencing give us some positive momentum in sales force size over that extended period.
Very helpful, Glenn. Then maybe thinking more long term, more broadly. The rep count was around 130,000 in 2018 and 2019 before the chaos of the pandemic. You're still there, which in a lot of ways is a great thing. The question is, Glenn, as we think longer term, are there any levers or initiatives that you're thinking about that might give Primerica substantial growth off of that 130,000 number?
Yeah, I think, Andrew, at this size, there's not a magic potion or magic pill. It is the blocking and tackling because you're dealing with a percentage increase on a very large number. We do believe that there is a demand in the marketplace that continues to support growth in the size of our sales force. The middle market is still chronically underserved in spite of our best efforts and a handful of other companies, possibly. The marketplace, the addressable market is still strong, and the attractiveness of our business model through all kinds of economic conditions and world events, you know, continues to be appealing. We think we have the fundamentals in place, and we'll use the opportunities that we see to try to add momentum to that as they appear.
You know, we don't have a game plan that says there'll be a huge momentum shift all of a sudden based on one announcement or one change, but we've got some fundamental strength in our process that I'm pleased with, and I do think we can take advantage of the things that I mentioned to accelerate the growth. You know, we've generally grown historically from plateau to plateau. We were at 100,000 for a long time. We went fairly quickly to 120 and plateaued there, and we got all the same questions. Then we went to 130, and unfortunately, just as we were beginning to break out of that plateau a little bit, COVID hit.
We're getting the same questions now, but we believe there's another plateau in front of us that's much higher than where we are today.
Awesome. I'm expecting 230,000. Anyway, if I could sneak one quick question in. You know, after a banner year last year in Investment and Savings Products where, you know, sales were up well into the double digits. This year you posted a good first quarter at 7%, and you've been guiding for mid-single digits. Given the volatility in the markets right now, and they are quite volatile, how are you thinking about that guidance?
Yeah, as I said in my prepared remarks, we are seeing even more volatility than we would have ever anticipated, as everyone is, of course. It's a little more significant headwind than when we talked last quarter. That's why we said right now we're projecting full year to be flattish with last year, as a result of things slowing. Again, at Primerica, it's not just the amount of volatility, it's the duration. If this passes fairly quickly, then it's less impactful. If it stays out there and remains volatile for a long period of time, the longer it's out there, the more it slows us down. It's not just the amount that we're seeing right now, which is higher than we expected.
It'll all tie into the duration and how long it lasts. Right now, all that into the recipe, we're looking at what we think is probably something pretty close to flat with last year for the full year.
That's great. Thanks so much.
Great. Glad to help.
Our next question is with Mark Hughes of Truist. Mark, your line is open.
Yeah, thank you. When we think about expenses next year, the rate of increase obviously tapering. I think you talked about a 4% increase in the fourth quarter. Is that a good way to think about 2023? You won't have the convention costs. Should it be low, mid-single digit expense growth next year? Any obvious things you would highlight to influence that number?
Yeah. Let me break that into sort of two buckets. Some of our expenses, you know, I always talk about a growth related category. Things like if our premiums grow, our premium taxes grow. If our assets under management grow, you know, administration fees grow. There are certain things that we call that we look at that are very tied to revenue growth. To the extent we think we're going to have five, 10, 15, 20% growth in some of those underlying dynamics, we would have the same growth and expense. You know, you have to sort of take that bucket separately and you can see it specifically on the ISP side. We lay those out for you in the financial supplements.
You can get a good sense of what percentage of the expenses are really very much tied to a revenue source versus our more general operating. When you look at sort of the core general operating expenses, I think historically we'd like to be in, I'd say, the 4%-6% range. That is because of things like maybe annual merit increases, which tend to be, you know, let's say 3%-ish. You know, we always have the ongoing need to invest in technology, which has been a little bit higher on the range, you know, maybe more like 9%-10%. With all that said, I think historically on the things that aren't tied to pure growth in our revenue sources, we'd like to be in the mid-single digits.
Let's say somewhere between 4%-6%, that's our target. Again, there is a large chunk of expense that you really need to look at what your assumptions are on the revenue before determining what the expenses will be. That help?
Appreciate it. Thank you. It does. Thank you.
Very good.
That concludes the conference call. Thank you for your participation. You may now disconnect your line.