Good day, and welcome to Primerica's investor call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one. Please note that this event is being recorded. I would now like to turn the conference over to Nicole Russell, Head of Investor Relations. Please go ahead.
Thank you, operator, and good evening, everyone. I would like to take a moment to welcome you to our call and direct your attention to the Investor Relations tab on our website for a copy of our press release and other materials relevant to today's call. Joining this call today are Chief Executive Officer, Glenn Williams, our Chief Financial Officer, Alison Rand, and our Head of Corporate Development and Strategy, Mr. Mike Miller. We will start with prepared remarks, and then we'll open the call for questions. During our call, some of our comments may contain forward-looking statements in accordance with the safe harbor provisions of the Securities Litigation Reform Act. The company assumes no obligations to update these statements to reflect new information.
We refer you to our press release issued after market close today, as well as 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 a non-GAAP measure, which we believe provides additional insight. A reconciliation of this non-GAAP measure to its respective GAAP number is included in the appendix of our presentation deck posted on our investor relations website. Finally, throughout this call, management will use e-TeleQuote and the acronym ETQ interchangeably. With that, I would like to turn the call over to Glenn.
Thank you, Nicole, and good evening, everyone. I appreciate you joining us on short notice. Today, I'm proud to announce that we have entered into a definitive agreement to purchase 80% of the operating subsidiaries of e-TeleQuote, a privately held Senior Health insurance distributor with an enterprise value of $600 million. We have simultaneously entered into a distribution agreement to refer potential Medicare Advantage and Medicare Supplement clients to e-TeleQuote through our U.S.-based sales force. Alison will expand on the financial considerations of the transaction in her prepared remarks, so I will focus my comments on the strategic importance of this acquisition, which will combine the strength of two successful companies to create a unique partnership to serve more clients and enhance the long-term growth opportunities for both businesses. Then I'll ask Mike to cover some of the specifics of e-TeleQuote's business.
For a number of years, the Primerica management team has had a parallel approach to growing our business within the framework of our strategic pillars. First, we focused on accelerating the growth of our distribution system, life insurance, and investment product sales through fundamental improvements to these traditional business areas. We've seen significant success from these efforts. Simultaneously, we've worked to identify new product lines for distribution, focusing on the needs in the middle market and looking for products that complement rather than compete with our current successful offerings. Guided by our strategic plan, we have identified mortgage distribution, which we launched successfully last year and is showing exciting growth prospects. We also identified senior health insurance distribution as an attractive opportunity in an area where we could potentially serve a larger share of the overall economics.
Today, we are excited to announce our upcoming entry into the senior health distribution space. As part of our strategic review, we noted that health insurance accounts for 15% of individuals' financial wallet. We divided the health insurance market into two distinct parts, insurance for individuals under the age of 65 and Senior Health. What we confirmed is that the insurance market for people under 65 is complex, constantly changing, and largely served through employer-sponsored plans. In contrast, the business and regulatory environment for the Senior Health market is both more stable and favorable. It also possesses attractive distribution economics and superior growth trends. Currently, there are over 70 million seniors in the U.S. aged 65 or older, and an estimated 10,000 more will reach that milestone every day.
This validates a clear need for Medicare-related insurance products, and we expect that the opportunity will continue to grow in the future. Having narrowed our focus to senior health distribution, we evaluated the various models in the marketplace to identify the best fit for Primerica. Our research led to the conclusion that sales center-based models are succeeding and have synergies to support the warm market relationships of our face-to-face sales force. In addition, these models are experiencing the growth trajectory we desire. The announced acquisition is the result of three years of work by our internal strategy team, assisted by outside advisors, to understand the space and engage with other potential partners. From these efforts, we recognized that the senior health insurance business requires significant specialized expertise, broad carrier relationships, and sales center infrastructure.
This ultimately led us to e-TeleQuote, which is the best fit for us with its innovative fast growth track record, dedicated employees, and strong entrepreneurial leadership. Over the last 10 years, they've built dynamic sales center capabilities, including specialized technology and unique representative training process. Leading our evaluation process was Mike Miller, our Executive Vice President and Head of Corporate Development and Strategy. I would like to ask Mike to walk us through the unique characteristics of e-TeleQuote.
Thanks, Glenn. Good evening, everyone. It's a pleasure to be with you for this announcement. One of the core strengths that attracted us to e-TeleQuote is their strong entrepreneurial leadership and breadth of well-established carrier relationships, including UnitedHealth, Humana, and Anthem, among others. e-TeleQuote currently offers more than 2,700 Medicare Advantage plans from more than 20 carriers across all 50 U.S. states, which aligns well with Primerica's U.S. distribution footprint. e-TeleQuote is also well-positioned to scale its Medicare Supplement business given its existing expertise in Medicare Advantage, strong carrier relationships, and proven client-centric, needs-based sales approach. This further expansion into Medicare Supplement will enhance its already attractive growth prospects. e-TeleQuote's successful model sources leads through various channels, including leads purchased or acquired through lead aggregators, search engine optimization for paid and organic listings, banner ads, and TV advertising.
These leads are then routed to licensed agents working in either sales centers or remotely from home to determine eligibility, evaluate client needs, and present the best available options. In 2020, e-TeleQuote, through its 500 licensed agents, received carrier approvals for approximately 106,000 policies. As a result, e-TeleQuote reported $160 million in revenues and $50 million of EBITDA. e-TeleQuote is the right size, maturity, and culture for Primerica. We believe this combination will create a formidable player in the Senior Health space that will be differentiated relative to competitors as a result of bringing together the best of Primerica's face-to-face distribution with ETQ's well-honed online and sales center expertise. The sector tailwinds that Glenn described earlier are strong, and we believe the business will continue to gain market share for the foreseeable future, aided by qualified referrals generated by our sales force.
Over the next three years, we expect to see e-TeleQuote's annual approved policies more than double, with approximately 10% of annual sales originating from referrals made by Primerica's sales force that Glenn will now discuss.
Thanks, Mike. With the Primerica distribution agreement, e-TeleQuote will begin receiving warm referrals from our sales force to supplement their current successful model. We expect to begin a pilot relatively quickly where our face-to-face sales force uses their warm market relationships to identify leads for e-TeleQuote. Primerica is approaching 800,000 clients who are over the age of 65, with an additional 90,000-plus Primerica clients turning 65 each year, and through our sales force has established relationships with these clients. This represents an attractive pool of prospective clients for which our reps can identify potential referrals to e-TeleQuote. Under the distribution agreement, Primerica reps will generate qualified leads for ETQ. Their licensed sales agents will assess client needs, present appropriate product recommendations, complete the application, and conduct the sale.
Because it is a referral process, Primerica reps generally will not need to obtain health insurance licenses for this business, and they will receive a referral fee for each submitted application. Primerica reps also will receive additional compensation for other services and support. While we are preparing our pilot game plan and expect to have members of our sales force ready to make referrals around the time of the transaction closing well ahead of the Medicare annual enrollment period, which runs from October 15 to December 7, 2021, and is typically when e-TeleQuote experiences the highest daily volume of applications submitted. Expanding our product offerings to add Senior Health plans allows us to serve clients at every stage of their life.
It also provides additional income opportunities for our sales force by enhancing the attractiveness of building a Primerica business with additional product breadth, which could open the doors to new clients and increase sales opportunities into our investments and savings products. e-TeleQuote's entrepreneurial and sales-oriented culture aligns well with Primerica. We're excited to join forces with them to help serve the financial needs of our clients more fully throughout their life cycle. Now, I'll turn it over to Alison.
Thank you, Glenn, and good evening, everyone. Let me start by summarizing the key terms of our purchase agreement. We are acquiring 80% of e-TeleQuote at an enterprise value of $600 million and an implied equity value of $450 million, assuming $150 million in debt at closing. This enterprise value represents a multiple of 12 times 2020 EBITDA, and at less than 10% of our market cap, we believe this is an efficient way for us to enter the Senior Health market. The transaction is expected to close on July 1st. At closing, we will fund the 80% ownership interest for $360 million and extinguish e-TeleQuote's existing debt, as we can provide funding at a lower cost than e-TeleQuote can secure on a standalone basis.
The closing will be funded as follows: $370 million in cash, $270 million of which is currently at the holding company and CAD 100 million of which will be distributed from Primerica Canada prior to closing. The distribution has already been approved by the Canadian regulator. Another $125 million cash from a draw on our revolving credit facility bearing interest at LIBOR plus 1.25%. $50 million in the form of a 12-month seller's note issued by The Resource Group International Limited or TRG, e-TeleQuote's majority shareholder. This note provides a cost-effective source of recourse for any post-closing liabilities that arise and will carry an annual interest rate of 1.5%. TRG will sell its full stake, 70.25% of total equity, while e-TeleQuote's management will sell 9.75% of total equity and retain a 20% stake in the company.
This remaining stake, along with structural components such as earn-outs and call and put rights that I will describe shortly, will help retain and incentivize key members of the e-TeleQuote management team. Primerica will acquire the remaining 20% equity stake through call and put rights over a period of up to 4 years. We have the option to purchase all or a portion of the remaining equity stake held by e-TeleQuote management, exercisable 12 and 24 months after closing. After the call rights expire, e-TeleQuote's management will sell Primerica any remaining portion of its equity stake, with 50% exercisable 36 months after closing and the remainder 48 months after closing. Calls and puts will be valued using a formulaic price that reflects a discount to e-TeleQuote's publicly traded peer multiples.
In addition to the consideration payable at closing, the purchase agreement includes an earn-out of up to $50 million based on e-TeleQuote achieving certain earnings growth targets. A maximum of $25 million of the earn-out will be payable in each of 2022 and 2023 for the preceding calendar year's performance, with the earnings starting at 85% of target for the applicable year and increasing on a straight line basis to 100% at target. To fund the acquisition, we have temporarily suspended our stock repurchase program. The company has not repurchased any of its stock year to date, nor does it plan to do so for the remainder of 2021. Given the company's strong capital generation, repurchases are expected to resume in 2022 in the $200 million range, while also generating enough deployable capital to fund the needs of both Primerica and e-TeleQuote's businesses.
After considering the draw on our revolving credit facility, the seller's note, the contingent portion of the purchase consideration, and other items, we expect our leverage ratio to increase to approximately 26% at closing and to be approximately 24% by year-end. We are very comfortable with this modest and temporary increase in leverage and will evaluate appropriate long-term capital structures prior to our existing senior debt maturing in 2022. e-TeleQuote's results will be reflected in our consolidated financial statements beginning in Q3 in a newly formed operating segment called Senior Health. This segment will be used to report all e-TeleQuote-related earnings, including those generated through the distribution agreement with Primerica. In accordance with revenue recognition guidance under ASC 606, revenues in the Senior Health segment will be recognized for the lifetime contract commissions at the time of sale, as e-TeleQuote has no remaining contractual performance obligations at that time.
Given its rapid growth, e-TeleQuote is currently cash flow negative as the cost of acquisition exceeds the initial cash commissions received from carriers. A key benefit of bringing the two businesses together is that Primerica's strong capital generation provides a cost-effective source of funding for e-TeleQuote's growth. We expect e-TeleQuote to remain cash flow negative through 2026, and the Senior Health segment will be allocated interest expense from the corporate and other distributed products segment to reflect its use of funds. In thinking about synergies with this acquisition, we do not anticipate any cost savings as e-TeleQuote will run on a largely independent basis. We expect to make investments in e-TeleQuote to meet our SOX compliance standards in areas such as information technology and financial reporting. As Glenn described earlier, the meaningful synergy story with this acquisition is the ability to generate incremental sales sourced by Primerica representatives.
With the addition of e-TeleQuote, our fee-based revenue mix will continue to grow. The percentage of total revenues that are fee-based are estimated to increase from 34% in 2020 to over 40% in 2024. The high growth dynamics of e-TeleQuote will enhance Primerica's already strong earnings growth story. Given its size relative to our existing businesses, we expect the Senior Health segment to represent about 10% of total consolidated earnings by 2023. The transaction is expected to be immediately accretive to EPS in the low single-digit range for 2021 and the mid-single-digit range for 2022. It is expected to be dilutive to ROE due to the temporary suspension of stock buybacks and the goodwill and intangibles created by this transaction. We firmly believe acquiring e-TeleQuote will create value for all of our stakeholders, including our clients, our sales force, our employees, and our stockholders.
With that, operator, let's open the line up for questions.
We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. Our first question today will come from Mark Hughes with Truist. Please go ahead.
Good evening, Mark.
Good evening. Congratulations. Excuse my voice.
You're all right. Thank you very much.
Yeah. You had mentioned, again, excuse my voice. When you're talking about the 10% of referrals that you expect to come from Primerica, you mentioned a doubling. What was that doubling metric you suggested?
Hey, Mark. I will answer that for you. The doubling really had to do with their core business. As we've all sort of mentioned, this is a rapidly growing business itself. It's a young business. The marketplace is growing. Its position in the marketplace is growing, and of course, their relationship with us will enhance that growth accordingly. The doubling was really looking at their existing book, and then we think of that entire book will represent about 10% of their business.
what was the period over which you would expect it to double?
It was about four years. Three years.
Okay.
Getting three fingers from Michael Miller. Three.
Three years. Okay. what is the lifetime value that you're projecting? You mentioned how your revenue recognition is all front-end loaded. What are you then assuming in terms of lifetime value and what's the duration associated with that?
Yeah. There'll be a lot more information on this to come, Mark, once we acquire the company and we can obviously finalize all of our understanding. We did a lot of work from a value perspective, obviously, to make sure holistically, we were comfortable with their revenues, their cash streams, and the like. If you've looked, and I don't know how much these analysts on this call have looked at some of these companies, if you look at the peers, they all have different ways of describing their metrics. We're wanting to make sure that we pick what we feel is the most representative for this particular business, and we can make sure we define that accordingly. Just like any 606 type of revenue, it is what you would expect.
You have to look at, as of today, what your expected future commissions are, you put some constraints around that, you look at historical information to say, what's your expected persistency on the business? The constraints GAAP applies for you to be able to say some things that are just hard to determine. Whether it's 5% or the like. It will be their future revenues as projected using historical persistency, looking at cohorts by issue year, and the like. Pretty typical from what you would see anywhere. It's pretty well-defined. The main thing for us is making sure that we define the basis under which we're going to give that LTV, whether it be submitted after, approved after or the like. More to come on that's how it will be determined.
With that in mind, has there been any change in churn lately?
Looking at this particular company, no. There's a lot of policies that come to market, there's also a lot of players that come to market, everybody has the ability to enroll, if you will, once a year. There's naturally a good bit of churn in this business. That being said, their churn, we believe from all the work we've done as part of our diligence process, has been stable and is in line with what we've seen from other peers that are publicly reported.
Just one more question, if I may. I've got a few more, but I will defer other than this one question. Glenn, what will be the constraint on your sales force referring your warm relationships to e-TeleQuote, this is an easy sale. These are products that people are already buying. All they have to do is kind of shift their spend over to their warm friend or family. Why wouldn't you get a lot of referrals? Maybe in that question is there some reason why these are sticky or stickier than I might understand? If the question is a banner ad or my beloved nephew, why wouldn't I go with my nephew?
Exactly, Mark. Well, you've asked the questions that we believe create an opportunity for us. We don't know the answers to all of those yet because it's a lot of well-researched theory up to this point. Until you get out in the marketplace, you never know why someone has an emotional attachment to something other than you or me. We do believe that there's a lot of momentum in our favor. The fact that we have these warm market relationships of various age and various strength, we have to keep in mind that some of these relationships may be so old that we have to go find out what the value of them is at this point. Certainly, even an old, weak relationship is better than no relationship, we think.
We do believe that we've got advantages that we bring that e-TeleQuote will benefit from and that are unique because we're certainly not aware of another model that has the infrastructure of a sales center like e-TeleQuote has, which a number of their peers do, but they just don't have access to this relationship-based referral source. That's where we're anticipating. We got a lot of work to do to prove the theory, but we're excited and optimistic about the fact that there's an advantage here that we can figure out in a relatively short period of time.
Thanks. I've got a couple more, but I will exit for now. Appreciate it.
Great. Look forward to hearing from you again.
Our next question will come from Ryan Krueger with KBW. Please go ahead.
Good evening, Ryan.
Hi, everyone. Hi, how are you? I had a first question was just on the EPS accretion guidance, mid-single digits by 2022. Is that net of the foregone buyback for 2021 or is it before considering that?
Yes, it's net of. We've taken that into consideration when determining the accretion.
Got it. Can you give us any sense of the magnitude of the negative cash flow either in 2020 or your expectations for the near term of the next year or two?
Yes. It is going to be obviously something that we feel comfortable with. Their negative cash flow was probably in the tune, maybe it's going to be in the tune of $40 million-$50 million this year. A lot of that has to do with how much we do, both with our distribution business, as well as what we have also included in that deal, to be clear, is all the added expenses that are going to be incurred to get this privately held company ready to be a public company, part of a public company. Some of that is a little bit created by this transaction. With that said, I'd look at it in sort of that range.
Got it. I just have a couple more questions. Do they use captive agents or do they use externally sourced third-party agents for the business?
No, theirs are all captive, Ryan. They are their employees working either from sales centers or some remotely, obviously during the pandemic. I'm sure like most companies, they'll figure out the new balance of that as we all try to return. They don't use third-party sales forces. They're all their employees who are salaried and bonused and licensed through e-TeleQuote.
Thanks. Last one for now at least. The merger agreement had some EBITDA projections for 2021 and 2022. Are those consistent with your EBITDA projections including additional expenses and things like that after the sale, or is that more related to their own previous EBITDA projections?
I'm not sure exactly what document you're referring to because we weren't to put out any EBITDA projections. Where are you pulling that from?
Yeah, the merger agreement has a couple different EBITDA projections, I think, related to the earn-out, $90.4 million in 2021 and $118 in 2022.
I was actually looking at our assistant general counsel trying to say if that's been posted. The bottom line is those are based on projections that the seller anticipated when they went to market and were marketing their organization. We built our view I would say a little more conservatively than their numbers. That being said, if they hit those numbers and triggered the full earn-out it would be a very successful story both for the members of management and TRG who would earn on the earn-out as well as for Primerica and its stockholders that would do quite well on those earnings too. Obviously our desire would be for them to hit those numbers. Whether they can or not we'll have to see. Again, those were their marketing numbers when they marketed the company, and that's what we therefore based their earn-out expectations on.
Understood. Thank you.
Our next question will come from Andrew Kligerman with Credit Suisse. Please go ahead.
Hello, Andrew.
Hey there. Good morning, good afternoon. Question first just to clarify some of these earnings impacts. In your low single-digit accretion in 2021 and mid-single-digit in 2022 the earn-out is contemplated in those numbers that accretion includes those earn-out figures?
The accretion numbers that we gave you include what our level of expected payout is on the earn-out, yes.
I see. Those earn-outs would be booked in the income statement and not going in through the balance sheet. That actually would run through the income statement assuming they get paid?
Yeah. To be honest with you, we'll have more time to talk about this as we get closer to bringing them in on consolidation. I think, and I don't want to get too much into the legalities of it, there are obviously desires for those to be capital transactions for the people who get them we will account for that accordingly. The expense would be running through our P&L.
Oh, great. Ultimately if everything works out and they hit their targets, which as you said is good news. The price tag would be $650 million, not $600, right?
Yes. If you went back and if they were able to earn the entire both tranches of the earn-outs, the entire enterprise value that would have been paid would be $650 million. Remember, thus far, we've only acquired 80% of the company. Keep that all in mind. There's another whole component, where the calls and puts will happen over up to four years, and those are based on formulaic prices that have a combination of earnings, both for the company and public company multiples, and it's a discount for the public company multiples. The $650 would be the enterprise value as of sort of that point in time, but we wouldn't have necessarily paid that because we only have acquired 80%.
Got it. Regarding the business itself, the mix of Medicare Advantage and MedSup, what's the mix there?
Yeah. e-TeleQuote historically has been primarily Medicare Advantage. In fact, almost all Medicare Advantage. They do have carriers for Medicare Supplement and do a small amount of that business. We do believe they are capable and have shown that through their history. We believe that our referrals are likely to be more balanced between the two products than they have shown historically. It was important to us to demonstrate that they could enter that business in a significant way. I think, as Mike mentioned in his prepared remarks, we see that as one of the opportunities in this relationship, is really to bring them more to bear against the need in the supplement market. Mike, you might want to comment on that.
No, I think that's exactly right. Of the two products, Medicare Advantage is far more complex. Medicare Supplement is a more straightforward sale. We feel very confident about making that transition versus a business that was focused on Medicare Supplement, making the transition to Medicare Advantage.
With regard to the Medicare Advantage market in general, with the new administration in place, are there any regulatory risks that may be in play here with a new administration?
It's a great question. One of the things that we like about the Senior Health space is, as Glenn mentioned in his comments, it's stable and very favorable. It's one of the very few things in Washington today that enjoys bipartisan support. We feel very positive about that. In fact, some of the discussions which are taking place in Washington today are about lowering the age for Medicare eligibility, which could be a positive on a net basis for this business.
Got it. Just lastly, one more. Life insurance. Is this a platform that someday, assuming success with the Medicare Advantage and MedSup, that you could build out a life insurance vertical? Is that something you thought about as you did this transaction?
Yeah, we've obviously thought about that, Andrew. We don't have any intention of offering other products that we currently sell through e-TeleQuote. We believe that the life insurance market, particularly in the middle market where we do business, is very much a face-to-face business, and one that our success there, and probably the considerable lack of competition there of other successful models demonstrates that to us. We believe we're properly positioned to our strength to continue the face-to-face relationship building, and use that to feed leads to e-TeleQuote on the Senior Health front, but we have no plans to do the opposite.
Got you. Thanks so much.
Great. Thank you.
Once again, if you'd like to ask a question, please press star then one. Our next question will be a follow-up from Mark Hughes with Truist. Please go ahead.
Give us a rest, Mark.
The other guys asked some great questions. I don't have much left. The earn-out expense, Alison, did you say that flows directly through the P&L? Whatever you're assuming relative to that $50 million bogey is already incorporated into the accretion estimates?
Yeah. Not to get too much into the technicalities, we are obviously, we haven't completed our PGAAP, I'm aging myself by saying that, but our purchase accounting work. The difference between whatever we apply as a fair value of the earn-out at the time of acquisition and the earn-out is what we'll go through, that is included in our estimate of accretion.
Right. Okay. Is it fair to think your estimate is half or the total of that amount, then once you get into 2023, that all drops away? Not huge numbers, but is that a fair way to think about it?
Yeah.
The accretion being dampened by those earn-out payments somewhat artificially.
Yeah, I do think both of those are pieces of holding back. Could hold back a little bit. I think it really has more to do, quite frankly, it's not the earn-out, it's the fact that this business, while it's growing tremendously, just relative size-wise to the rest of our book of business, it's going to take some time for it to become meaningful. Even though it could be a powerhouse on its own and doing tremendously well, just because of relative size, it can only move EPS so much in any given period. Every year, I do believe, while I don't want to diminish our growth rate, because I believe our growth rate has been tremendous, this is a very, very high growth industry, very high growth business.
When you take that and layer it on top of our strong growth, it does really provide a nice story with regard to what our potential could be. Again, it's going to take a little time for this business just to get large enough, to really move the needle on our bottom line. That's really the bigger piece of the story, more than the earn-out or any other small piece of the equation.
Understood. The quarterly earnings impact, is it expense drag through the first three quarters and a very profitable fourth quarter? Am I thinking about that properly?
Are you thinking of their business alone?
Yes.
Their business is seasonal. Glenn mentioned the annual enrollment period, they do a lot of their volume during that sort of what we would call the fourth quarter period. That being said, this business does do a nice mix of other types of business, special needs and the like, they do produce quite a bit of volume throughout the year. You are absolutely correct that the bulk of their revenues, if you want, and cash will come in at end of year, beginning of the calendar year, when those policies go effective.
You've mentioned the sales force. You felt like their training was quite strong with infrastructure and expertise. Are the sales kind of straight line with the sales force? Whatever you were projecting, you need to make sure you have that number of folks, and presuming that's already are being done now, is there any outlook you can give us for the sales force growth this year?
I think the way I'd characterize it is what Glenn said. We're endeavoring to start a pilot near the closing period for the transaction, it will take time to get the right folks trained in our sales force, we'll start to expand and add states and so forth. I think once we get up to a run rate in terms of the number of policies produced, just like our life insurance business, it will scale as we grow the sales force at that point, but we're probably a couple of years out until we get to that run rate.
Mark, were you asking about productivity of our sales force or the e-TeleQuote sales force?
The e-TeleQuote sales force.
Yeah.
What's the secret sauce, and what are they going to grow this year, I guess, is my question.
Yeah. Well, they've developed, again, they have kind of mastered, if you will, the Medicare Advantage space and also some good work in the special needs space, and they really train their people well around what they're good at. They attract quality people, train them well. The curves that we've seen on their productivity is exactly what you'd expect, and what Mike just described about our sales force. The newer reps are not nearly as productive as the experienced reps. That productivity and success rate drives who gets which leads and what the algorithms that create the best outcomes for all of that. They've got a good system for doing that, for identifying their successful salespeople, for training people to the appropriate level. There's no replacement for somebody being on the phones and talking to clients and gaining that expertise.
You're right, there is a relationship between the number of licensed reps they have and their sales. It's similar to the dynamic we have, although the numbers are very different. You're right, there is a game plan to grow the size of that sales force, which will ultimately grow their total sales. Mike, you might want to add something else to that, too.
No, that's exactly right. They ended the year with around 700 agents, had 500 on average throughout last year, they're already approaching 900, they're making a good run at growth, we're pleased to see that, and we're excited to be a part of their build story going forward.
Thank you very much.
Very good. Thanks, Mark.
Our next question will come from Ryan Krueger with KBW. Please go ahead.
I just had a couple quick follow-ups. I guess on the agents, I know you talked about referrals, but longer term, would you ever anticipate recruiting agents within Primerica that then got moved over into this business?
No, I think it's probably, Ryan, two very different mindsets. Clearly, there could be some movement in between, but as I've described before at Primerica, we recruit entrepreneurs that want to be in the financial services business, but they're entrepreneurs first. They don't think of themselves as commissioned salespeople or employees, and so there's probably a mindset difference by and large in the two sales forces. That said, I'm sure there will be some people that look up and say, "Wow, that looks interesting over there. I think I'd like to try that." We want to manage that so it's not disrupted, but I think there could be some of that. There's no plan to try to facilitate that at this point because we're not sure what we gain from it. As we go, we'll evaluate that and see if we're missing an opportunity there.
Thanks. Just last one. What do you expect holding company cash to be pro forma for the deal?
You mean after?
Yeah. After.
We expect it to, by the time we report, it'll be over $150 million. Our target is to get it back up closer to $200 million in very short order.
Got it. Thank you.
This will conclude the question and answer session, also concluding today's call. We'd like to thank you for attending today's presentation. At this time, you may now disconnect your lines.