Good morning, and welcome to the 2013 Annual Meeting of Stockholders of Primerica, Inc. I am Rick Williams, Chairman of the Board and Co-Chief Executive Officer of Primerica. I now call this meeting to order. As a reminder, please ensure that your cell phones have been turned off. This meeting is being webcast for the benefit of remote participants. The Board has appointed Deborah Baker to act as our Inspector of Elections. Ms. Baker, please stand. Thank you. At this time, I am pleased to introduce our Directors. Please stand as I call your name and remain standing until all the Directors are introduced. Our Directors are Joel Babbit, Co-Founder and Chief Executive Officer of Mother Nature Network. John Addison, Chairman of the Board of Primerica Distribution and Co-Chief Executive Officer. George Benson, the President of the College of Charleston.
Michael Martin, a Partner of Warburg Pincus & Co., a Managing Director of Warburg Pincus LLC, and our Lead Director. Mark Mason, the Chief Executive Officer of Citi Private Bank. Bob McCullough, a retired Senior Partner of Invesco Limited and a former Partner of Arthur Andersen. Barbara Yastine, the Chair, President, and Chief Executive Officer of Ally Bank. Dan Zilberman, a Partner of Warburg Pincus & Co. and a Managing Director of Warburg Pincus LLC. Thank you. Seated to my right is Peter Schneider, Executive Vice President, General Counsel, and Corporate Secretary of the company, who will act as secretary of this meeting. I would also like to introduce our other senior executives who are with us today. Greg Pitts is our Executive Vice President and Chief Operating Officer. Alison Rand is our Executive Vice President and Chief Financial Officer, and Glenn Williams is our President. Thank you.
At this time, I am also pleased to introduce Rand Meyer of our independent registered public accounting firm, KPMG. The Inspector of Elections has reported that holders of at least 91% of the outstanding shares of common stock as of the record date are present in person or represented by proxy. A quorum is present, and the meeting is duly convened. Each of you was provided with a copy of the agenda and procedures for conducting today's meeting. If you did not receive one, please raise your hand and one will be provided for you. According to Mr. Schneider, notice of the meeting was distributed on or about April 5, 2013, to all stockholders of record on March 25, 2013.
A list of all of our stockholders of record as of that date has been available at the company's offices for at least the last 10 days and is available for inspection by stockholders at any time during the meeting. We will announce the preliminary number of votes in our totals. The final vote count will be certified after the meeting and reported as required by the Securities and Exchange Commission. There are five matters for consideration today. These matters are listed in the notice of annual meeting that is attached to the proxy statement. Under our bylaws, certain procedures must be followed for Director nominations and other business proposals to be brought before the meeting. No nominations or other proposals have been received other than those described in the proxy statement.
Nominations for directors are closed, and no proposal other than those described in the proxy statement may come before the meeting. Note that this meeting will be slightly different than previous meetings. If the first matter for consideration, the proposal to declassify our board, is approved by our stockholders, the election of nine directors cannot occur until after an amendment to our certificate of incorporation has been filed with the Secretary of State for the State of Delaware. We will pause the business portion of the meeting while that filing is made and then recommence with the election of directors after we have received confirmation of filing from the State of Delaware. This confirmation could take up to 20 minutes, we will take that opportunity to share our remarks about the company and to show some recent videos about our company.
Only holders of the company's common stock on March 25, 2013, the record date for this meeting, or persons holding a valid proxy for such shares, may address the meeting. If you are a record holder and you have voted by proxy, you do not need to complete a ballot in person at this meeting. If you wish to revoke a proxy previously submitted and vote in person, or if you have not previously submitted a proxy and wish to vote in person, please raise your hand and a ballot will be brought to you. It is now 10:05 A.M., the polls are now open for anyone who wants to cast a vote or change an earlier vote. Now we will consider the amendment of our restated certificate of incorporation to declassify our board of directors. Information about this proposal is contained in the proxy statement.
Is there any discussion on this proposal? I see that there are no questions at this time. There will be a question and answer period later in the meeting during which you may ask questions if you wish. Next, we will consider the amendment of our restated certificate of incorporation to remove the supermajority vote required to amend certain provisions of our restated certificate of incorporation. Information about this proposal is contained in the proxy statement. Is there any discussion on this proposal? I see that there are no questions at this time. We will now consider the amendment of our restated certificate of incorporation to remove inoperative language relating to certain former rights of Citigroup Inc. Information about this proposal is contained in the proxy statement. Is there any discussion on this proposal? I see that there are no questions at this time.
Has everyone who wishes to vote had a chance to do so? With those of you who wish to vote in person on the first three matters presented at this meeting, please mark your ballot and raise your hand to give it to one of the attendants. I hereby declare that the polls in the first three matters presented at the meeting are now closed as of 10:08 A.M. today. The proxies will be held in the possession of the Inspector of Elections. The Inspector of Elections will now count the votes in the first three matters. The next item of business, the election of directors, cannot proceed until the Inspector of Elections tallies the votes on the proposal to declassify our board of directors.
If that proposal is approved, we will file an amendment to our restated certificate of incorporation reflecting such change with the Secretary of the State of the State of Delaware. We will now report on the results of the balloting on the first three matters presented at this meeting. Mr. Schneider, do you have the preliminary report of the inspector?
Yes, I do. The inspector reports that at least 48.6 million shares, representing more than 85% of our outstanding shares of common stock, have been voted for the amendment to the restated certificate of incorporation to declassify our board of directors. The inspector reports that at least 48.6 million shares, representing more than 85% of our outstanding shares of common stock, have been voted for the amendment to the restated certificate of incorporation to remove the super majority vote required to amend certain provisions of our restated certificate of incorporation. The inspector reports that at least 48.6 million shares, representing more than 85% of the shares cast at the meeting, have been voted for the amendment to the restated certificate of incorporation to remove inoperative language relating to certain former rights of Citigroup Inc.
The inspector will furnish the secretary a written report of the final vote count with respect to these matters, which shall be included in the minutes of the meeting.
Thank you, Mr. Schneider. I declare that the report of the inspectors is approved. Mr. Schneider, please have the three amendments to the restated certificate of incorporation filed with the Secretary of the State of the State of Delaware. While the revised charter is being filed, we will pause for some short videos and my remarks about the business. After we have received confirmation from the Secretary of State of the State of Delaware, we will proceed with the business portion of the meeting.
Welcome to such a special day. It's our honor to have you join us for opening day at Primerica International Headquarters, located at number one Primerica Parkway. You know, I have said repeatedly that my goal is to make Georgia the number one place in the country in which to do business. With the example that you're setting here today, you're telling the rest of the world that that is in fact already happening, and I thank you for that.
I think you ought to get your staff together and draft up a bill and have a Primerica holiday, a state holiday.
Out of this building, this state-of-the-art facility, we're going to grow recruits like we never have before, licenses like we never have before, promote RVPs like we've never had before, create owners like we've never had before, and grow legacies like we never have before. That's our challenge today.
It's the people that make Primerica special. People that make this thing important. Everything you do inside this building is to do nothing but serve the people. See you at the top, guys.
This building is here for this sales force, for this team, for us to go get gigantic. Today marks the beginning of the beginning.
You give me a chance to build a business where I can change my family for generations, where nobody can put their thumb on me and squeeze me?
We're all future RVPs or future SVPs or future NSDs. We're all moving, trying to grow. It's promotions in motion.
We got to be the leaders. We got to be the vision makers. We got to be the dream sellers that challenge our people.
We are at a moment, not a good moment, a great moment. We're not a good company, we're a great company.
I wanted to be somebody so dadgum bad, nobody or nothing could stop me.
Main Street. As North Americans, it's where we've always gathered to do our banking, shopping, and to celebrate our achievements. Main Street is the very soul of North America. The financial services industry, the very people we counted on to manage our money and help us build for retirement, have all abandoned Main Street, and now they spend their time on Wall Street. That's where Primerica is different. Our mission is, and always has been, to help families become properly protected, debt-free, and financially independent. Primerica is a Main Street company for Main Street North America.
When you look at Main Street North America, the one thing they have in common is usually financial issues and financial problems. In all honesty, they don't understand how they're going to ever have a retirement, how they're ever going to be financially independent, and they get sick and tired of living month to month, one paycheck to the next. The people that make North America run, the working people, the people trying to raise a family, Main Street, has been left to their own devices, and they don't know who's going to help them.
Primerica is a family. It's made up of good people doing good things to help others. That's our strength and our uniqueness. Our leaders come from all walks of life. They're coaches, teachers, firemen, students. We offer opportunity to people who all want the same thing: to be somebody, but more importantly, the chance to make a difference in people's lives.
How many people do you know that are saving too much money every month?
I love the fact that we teach people how money works. In this world we live in today, people are broker than they've ever been. People have less hope than they've ever had.
When you understand how money works, life totally changes. When you know the rules of the game, you can win. If you don't know the rules, it's very tough.
The more that you learn about Primerica, the more that you learn about our products and what we really do and how we really help families, you just can't help but be passionate about it.
Primerica originated the buy term and invest the difference philosophy in 1977, allowing families to purchase affordable term life insurance and, at the same time, invest for their family's future. Our primary goal is to meet the growing needs of the middle class.
We spend a lot of time teaching families how to change their financial lives. We teach people about money. We teach them about how to save money. We teach them how to invest money. We teach them how to get out of debt. Those are things that will never go out of style.
What Primerica has meant to our family is unmeasurable. That's why we get up every day understanding that we have an obligation to give back.
Primerica delivers common sense financial solutions to families. We offer opportunity for people who want to take control of their lives. These are the cornerstones of Primerica and provide the foundation for our profound respect for Main Street, the very fabric of North America.
I'd like to take a few moments and highlight some of the accomplishments over the last year. In 2012, our sales force grew by 1,200 agents to 92,373 after declining over the last few years. This turnaround is attributable to a specific set of initiatives implemented during the year, emphasizing licensing and distribution growth. We began this process at the end of the first quarter by making significant adjustments to our messaging and incentive programs, simplifying qualifications, and providing incentives to train, license, and help new representatives become productive. A new streamlined licensing process we call Success Now was launched mid-year, providing an easy step-by-step program for new recruits to follow to become licensed. Coupled with a revised program for our licensing instructors, enabling them to more closely assist individual recruits through the process.
In August, we also modified our life insurance compensation system to place more emphasis on developing new leaders and building distribution and less emphasis on short-term premium hurdles. These initiatives drove a 30% increase in the ratio of new recruits obtaining a life license and higher new life licenses on a lower recruit level. The compensation change also drove a more balanced business approach by our RVPs. With less focus on premium hurdles, our life policies issued declined 6% to 222,000 policies, but our investment in savings sales grew 10% to their highest level since 2007. The enhancements we made to our ISP business during the year position us to capitalize on the changing tide in investor confidence. The introduction of a fixed annuity product generated $395 million in sales, reflecting the popularity of a product oriented to capital preservation.
Our managed account program continued to grow, reaching $582 million in assets by the end of the year. In the remainder of my remarks, I reference certain non-GAAP financial measures. These non-GAAP measures are provided because management uses them in making financial, operating, and planning decisions and in evaluating the company's performance. These non-GAAP measures have limitations, and reconciliations between non-GAAP and GAAP financial measures are available on our website. In 2012, our operating revenues grew 8% to $1,179,000,000, driven by an 18% increase in term life net premium revenue and a 10% increase in ISP sales. Net operating income increased 12% to $174.5 million compared to 2011. Diluted operating net income per share increased 32%, from $2.07 in 2011 to $2.72 in 2012.
Our net operating income return on adjusted stockholders' equity increased from 11.8% in 2011 to 14.3% in 2012, a number well above our peers, confirm that we are a distribution company, not a traditional life insurance company. Our capital structure remained solid during the year as our adjusted book value per share increased 9% to $20.60 from $18.98 at the end of 2011. In 2012, we continued to execute our capital strategy. We completed a redundant reserve financing in the first half of the year, freeing up capital for stock buybacks while still leaving Primerica Life's risk-based capital ratio above 600% at year-end. We successfully executed a $375 million 10-year inaugural debt offering, raising $75 million above the $300 million used to pay off the Citi note, with only a slight increase in our interest expense, still leaving our debt to capital at year-end at a conservative 22.7%.
For the full year, we repurchased a total of 9.5 million shares for $257.3 million, retiring 15% of Primerica's outstanding stock. Since our IPO in April of 2010, we've retired approximately 25% of our common stock outstanding. We tripled our dividend from $0.03 in the first quarter to $0.09 in the fourth quarter of 2012, to $0.11 in the first quarter of 2013. Best of all, our stock performed very well during the year, yielding a 30.2% return, including dividends, significantly outpacing the S&P 500. Most recently in May, we have paid a $150 million ordinary dividend from Primerica Life to Primerica, Inc., which will enable us to continue to enhance shareholder value with further share repurchases. We are confident in the strength of our business and our ability to execute a strategy that positions Primerica for future success.
As the largest independent financial services marketing organization in North America, we are uniquely positioned to profitably sell high volumes of term life insurance and third-party fee-based products to vast and underserved middle-income market. We remain committed to building Primerica for the future and feel good about the opportunities before us as we work to deliver long-term shareholder value.
Throughout history, society's most pivotal changes began with a movement. Ultimately, many of these movements changed the course of history. Primerica is dedicated to creating a Main Street Movement, Our mission is to help families like yours become financially independent.
Nothing is more important than providing financial security for your family.
One of the most joyous things in life is helping other people.
Primerica empowers people to make a difference. It's about finding people who want to make a difference in other people's lives, while at the same time enriching their own.
What more noble cause could there possibly be?
Primerica is committed to correcting the injustices that fuel this nation's current burden of debt. Other financial institutions, including banks, life insurance companies, and investment firms, routinely ignored your needs, sold you the wrong products, and profited at the expense of our struggling economy.
There are literally millions of people that need our help.
We show up with answers to people's biggest financial challenges.
It really feels good to help people.
It feels even better to be paid to do it.
For far too long, people have struggled with the loss of jobs they hate, or jobs that don't pay them what they're worth. At Primerica, we take a different approach. It's about unlimited income potential and the opportunity to call your own shots.
Primerica is a movement.
Movements start with tiny steps.
Take your first step.
Do it for your future.
Do it for your family. Just do it because it feels good to help someone else.
There are no excuses. You can change your financial future.
If not now, when?
You have a chance to be a part of our Main Street Movement and do something truly historic.
We got a lot of work to do, but it's going to be worth it. Help us turn this Main Street Movement into a tidal wave.
Financial freedom feels better than you can possibly imagine.
It's possible for you to have this feeling.
Seriously. Come on, let's get started.
You need to make a decision today. Just go for it.
Let's help North America get back on the right track.
Primerica's Main Street Movement can revolutionize the way you and your family envision your financial future. Join our movement and learn how you can make a difference.
We are still waiting to hear back on the refiling of the charter. At this point, we'll take a short break until we hear back, and we'll be back to you hopefully in just two or three minutes. Mr. Schneider, have the amendments to the restated certificate of incorporation been filed with the Secretary of the State of the state of Delaware?
Yes, Mr. Chairman. The charter amendments have been appropriately filed in Delaware.
The proposal to declassify our board of directors has been approved, the stockholders will consider the proposal in our proxy statement to elect nine directors to serve until the annual meeting of stockholders in 2014. Information about each nominee is contained in the proxy statement, along with the recommendation of the board for the election of our nine nominees. Is there any discussion of the slate of directors? I see that there are no questions at this time. The final item of business is consideration of a proposal to ratify the appointment by the audit committee of KPMG as the company's independent registered public accounting firm to audit the financial statements, books, and records of the company for the fiscal year ending December 31st, 2013. Mr. Meyer of KPMG is available to answer questions.
Please raise your hand and a microphone will be brought to you if you have a question. I see that there are no questions at this time. Has everyone who wishes to vote had a chance to do so? Would those of you who wish to vote in person on the final two matters presented at this meeting, please mark your ballot and raise your hand to give it to one of the attendants. I hereby declare the polls on the final matters presented at this meeting are now closed as of 10:28 A.M. today. The proxies will be held in the possession of the Inspector of Elections. The Inspector of Elections will now count the votes. We will now report on the results of the remaining balloting. Mr. Schneider, do you have the preliminary report of the inspector?
Yes, I do. The inspector reports that at least 47.9 million shares, representing more than 98% of the votes cast at this meeting, have been voted for the election of each of the nine directors recommended and nominated. Congratulations to the directors. The inspector reports that at least 51.7 million shares, or approximately 99% of the votes cast at this meeting, have been voted for the proposal to ratify the appointment of KPMG LLP as the company's independent registered public accounting firm for the 2013 fiscal year. The inspector will furnish the secretary a written report of the final vote count with respect to these matters, which shall be included in the minutes of the meeting.
Final results, including the results for each nominee, will be included in a Form 8-K filed with the SEC within four business days and will be posted on our investor relations website.
Thank you, Mr. Schneider. I declare that the report of the inspectors is approved and that based upon the preliminary results, the nominees for directors have been duly elected and the appointment of KPMG has been ratified. We will now begin the question and answer period. If you are a stockholder and wish to ask a question, please raise your hand and a microphone will be brought to you. Please state your name and the number of shares you own or for which you hold a valid proxy. If you represent an institutional owner, please also state the name of your firm. Please adhere to the two-minute time period and the limit of two questions per stockholder as described in the meeting procedures as a courtesy to all present. I would like to thank you again for your support and continued confidence in Primerica. Is there a motion for adjournment?
Moved.
Second?
Second.
All in favor?
Aye.
All opposed, say no. The motion is carried. I hereby declare the 2013 annual meeting of stockholders of Primerica adjourned. Thank you