We're going to get going with the last presentation of the day, which is from Primerica. Despite the tough environment for life insurers generally, Primerica has really stood out from the rest of the crowd as one of the best-performing stocks year-to-date. Its unique distribution model, low interest sensitivity, strong capital position has made it really stand out as having a very strong safe haven position. Let me hand it over to Glenn to run through the rest of it.
Thanks very much, Nigel. All right. We have the forward-looking statements page and then the first page of the presentation. Make sure that you've got a presentation from the back if it's helpful to you. Thanks for attending this afternoon. We're going to give you an introduction to or an update on, if you're familiar with us, Primerica. We do consider ourselves the leading distributor of financial services to the broad middle market in the U.S. and Canada. I want to tell you a little bit about that and then have Alison cover some of the financial details. We're of the view that the middle market opportunity is huge. We don't encounter significant competition in the middle market in spite of its size. We define it as between $30,000 and $100,000 of household income.
You can see from the chart on the screen, that's about half of the households in the U.S. The way that we view that market is they're underserved or in some cases abandoned by other financial services providers who've moved upscale. That leaves significant needs in that marketplace, both for life insurance, which we provide, savings products, particularly in the area of retirement and education savings, have a tremendous burden of debt, and they're not getting a lot of advice. In addition to that, the uniqueness of our distribution model provides a business opportunity for them to even increase their income by a part-time or a full-time business opportunity. Over on the right-hand side of this slide, you can see some of the description of what I've just given you.
Perhaps I bring to your attention our unique model in the middle of the right-hand side of the slide because we have designed our model specifically to address the uniquenesses of the middle market and its characteristics. We believe that the middle market is not interested in a heavy-handed sales approach. We take a warm market, educational sales approach that's very comfortable both for the client and for the part-time and perhaps inexperienced person that's part of our distribution force. We do have an independent contractor distribution force that pays its own expenses. That's unique and allows us to access the middle market when many of our competitors or perhaps those with a more traditional model would not be able to because they're supporting all their sales force expenses. The majority of our people you'll see are part-time.
They start the business part-time and then hope to work toward a full-time business opportunity or perhaps stay part-time for an extended period. It doesn't matter to us. It works either way for us, whatever suits them. Because we're exclusive in the middle market, we're not as price sensitive as perhaps some of the other traditional financial services organizations might be. That gives us a little room to have a significant margin in our business as well. You see some stats at the bottom part of that page on that middle market that perhaps you've seen before. The thing you notice about us first is the size of our distribution sales force, approximately 90,000 licensed life insurance representatives in the U.S. and Canada, significantly larger than any of the other players that we encounter in the middle market. I think that's pretty easy to recognize.
What you might not be familiar with is the experience and the time, the longevity of the sales force. You see in the box in the upper right-hand corner, about 20,000, actually, it's up now to about 22,000 of our 90,000 have over 10 years of service with us. 7,000 of those over 20 years. It's almost 7,400 now, as a matter of fact. That same dynamic is true of our employee base as well. We employ about 2,000 people to service the sales force, most of them based in Atlanta that have an accent similar to mine. Those people even have the same type of longevity. Our senior leadership has an average tenure with the company of about 24 years, and our officers and managers, 18 years on average.
We're a company that's relatively new in the public marketplace but have quite a track record of working together. Our two main product lines, term insurance that we manufacture and sell and investments in savings products that someone else manufactures and we sell. We start out by staking out a territory appropriate for the middle market from a philosophy perspective, what we believe about the appropriate application of the product. As you can see on the term insurance side of this slide, 10- to 35-year level term, which is appropriate for most of the families in the middle market for their long-term income protection needs. Then as they age and their responsibilities begin to decrease, perhaps they can replace that insurance with the savings and investment products on the right side. Significant scale of business.
You see some stats there in the middle of the page on the left-hand side. Almost $665 billion of face amount in force. We are a significant player in the life insurance market. We issue on average a $250,000 policy, which is probably smaller than most term insurers, but it is an appropriate amount for the middle market. You can see our first quarter results at the bottom left-hand side, 9% increase in policies issued in the first quarter of this year compared to the first quarter of last year, significant premium growth and over $44 million in operating income. The right-hand side, the investment side of the buy term and invest the difference philosophy. As I said, we distribute funds from other providers, partners in the business.
You can see the list there from Mutual Funds to Annuities, Segregated Funds in Canada, VAs and Fixed Indexed Annuities in the U.S., as well as some Managed Accounts products. Most of those products are at the training wheels level of financial services provision. They're appropriate for the middle market, but they're fairly simple, which allows us to leverage the large sales force. We do take a long-term approach. Again, the scale of the business. We have about $36 billion of account values on average during the first quarter. You can see some of our partners there, familiar names. About $4.25 billion in sales in 2011. You can see the financial results at the bottom, down there in the lower right-hand corner, including almost $29 million in operating income in the first quarter.
Because we're unique in a number of ways, but mostly people see our distribution capabilities, just a little more detail on distribution. You can see in the upper left-hand corner of this slide, the 58,000-plus of people that were recruited to Primerica in the first quarter of 2012. That was an 11% increase in recruiting. Recognize that we define a recruit probably a little differently from the traditional financial services business. You pay $99 and sign our contract. You become a recruit, which enables you to learn about Primerica and decide if you want to begin a career here. Obviously, following that, you go through the licensing process that's required by the state or province to actually engage in our business and to be able to make sales and be compensated.
You see in the lower left-hand corner of this slide, the results for the first quarter of this year compared to the both fourth and first quarter of last year. Again, the 58,000-plus recruits, which was an 11% increase. The licensed sales force, again, at roughly 90,000 on average as of the end of that period. Issued policies over 56,000. I mentioned our life insurance in force already and our ISP sales for the quarter, as well as our account values of over $36 billion at the end of the year. As we look at 2012 and the results from the first quarter, we're very focused on growing the size of our sales force. If you've looked at our numbers, you know the economic headwinds have impacted the size of our sales force in the last couple of years negatively.
We saw some positive trends in the first quarter, both in recruiting and licensing that you can see in that right column, that we are working hard to continue going forward. To do that, we're adjusting our incentive programs, our compensation to make sure they are more focused on the size of our sales force and growing distribution as that is our key attribute. With that, turn over to Alison for some financial commentary.
Thank you, Glenn. I think this page really sums up a lot of what I ultimately want to say about our organization. Glenn's talked quite a bit now about our distribution, the differentiating factors, the size of it, the fact that we target the middle market. Really what you see on this page is probably why we've outperformed, as Nigel was mentioning, the rest of our "peer group." It's because we're peered with traditional insurance companies, but we really look at ourselves very uniquely from insurance companies. If you look at this page at the top, it looks at how we look at our different income components. You'll see that we have 42% of our income is coming from fee-based sources. Really, it's non-insurance based. It's the ISP business that Glenn was referring to.
That's in comparison to about 16% if you look at the general peer group. Looking at insurance premiums, these numbers are very consistent with the insurance business in general. The key here is that we have a very fixed margin on our insurance business. Let me talk about that for a second. We really do focus on our business as more of a distribution model. With our insurance, we look at what our biggest risk is, our biggest volatility, which would be mortality. We actually lock that in on a 90% YRT basis and have been doing so since 1994. Essentially, we take what is probably the biggest risk in a true life insurance type of business, traditional life business, and we lock it in day one.
That has become the fixed cost, a fixed margin component, really leaving us very little volatility in our profit margins as the policy goes through its durations. On investment income, again, another key differentiator, especially in today's environment, is that we only earn 10% of our income based on our investment portfolio. You'll see the next metric down, we have asset leverage of 1.7 times versus our peer group, which is at close to 34% and an average of over nine times. Really, one of the big differentiators in our business is the fact that we are not asset intensive. We only sell Term Life insurance. We don't have interest sensitivity in our product set, and we're not required to hold a significant amount of assets to back our book of business.
Again, very different than what you see with most writers today who are very focused on things like Variable Annuities or products that do require quite a bit of assets and exposure to the markets. Moving further down the page, we have maintained and continue to maintain higher than average ROEs. The number that you see on this page is actually a pro forma figure, and it's pro forma for the share repurchase that we did early on in the second quarter. Again, we are at about the 14.5%, 14.6 mark versus our peer group at 12.7. I'd actually say if you'd looked at the peer group before the DAC accounting changes that went into play January 1st, they were actually quite a bit lower than the 12.7. They were actually benefited because they had such large write-offs of their DAC, so their equity is actually reduced.
I do think on an ongoing basis, we will be at the upper end of what you would see amongst the peers, and again, a key item in driving what we believe is the value of our stock. On the flip side, you'll see our debt to capital is extremely low, probably the lowest in the sector. We certainly look at this and understand it is prudent to have certain levels of debt on our books, but certainly I'd look at this as an opportunity for us to raise capital, have capacity to do other things if we chose to do so. I'm never good with these. We do have three operating segments. I'll come back in a moment and talk about Term Life and ISP in more detail, but let me spend a moment here on Corporate and Other.
That is pretty much what it says. It is the hodgepodge. It's everything that's not the core businesses. What comes in those businesses are going to be our non-Term Life businesses that we have through our New York underwriter, as well as things like our Pre-Paid Legal Services, products that we distribute on behalf of third parties. We really don't have to maintain any capital for them. Very little operating expense base. They all go into this Corporate and Other. It's also where we house most of our operating expenses. Anything that's directly attributable to one of the other two segments is obviously in the Other segment, and expenses associated with our sales force are allocated to the two operating segments. Other than that, all of the general overhead and fixed type costs are held in Corporate and Other, as are gains and losses on the portfolio.
Investment income is one last thing. We allocate investment income to Term Life based on assets required to support our statutory balance sheet. Everything else is held in Corporate and Other. We expect that to operate at a loss. That's not a surprise to us, and it will operate at a loss because it largely has expenses versus revenues. If you look at the right-hand side of the page and the mix of our operating revenues, we're at just above 50% being Term Life. It was slightly lower than that when we first went out public. As we've continued to build back up our back book of business post the Citi transaction, it has increased, and I do expect that to continue to increase to the high 50s%.
The rest of the business, the rest of the revenues are nicely mixed between our investment and savings products and our Corporate and Other. Looking at Term Life for a moment, I'm not sure how familiar you are with the transaction we did with Citi. We did, upon separation from Citi, cede back to them about 80%, 80-plus% of our back book of business. The chart on the right demonstrates that we were starting from a very low net premium base, and as we put on business, a very large percentage of it became subject to what was not subject to Citi. We started out with just 24% of our premiums were post the Citi transaction. We're up to 45%. Actually, in the last quarter, it was 52%.
really all that is the layering on each year of a new block of business. It's not magical. It's a little bit arithmetical, we have built our structure such that we have inherent growth without having to actually grow the amount of business we're selling each year. Obviously, as Glenn was highlighting, to the extent we can also grow the amount of business, that's incremental to this. This was just a fundamental piece of our structure as we entered the public arena. If you look at the new term business, it is the business that's been issued post 2010. It is highly reinsured, as I mentioned earlier. The expense associated with it will continue. The fixed expense coverage will continue to improve as we get this block of business larger and larger.
Again, it's now 52% of our premium base, where it started out as basically zero. As that continues to migrate north, we will have better and better fixed expense coverage. On the legacy side, this business is a closed block. We are paid by Citi to service this business. It has helped us maintain the size of our infrastructure as we rebuild our net premium base. This business does run off at a pretty steady rate of about 8% per year. On the ISP side of the house, this business earns very differently than life insurance. To the extent you're familiar with life insurance, we will generate GAAP earnings very slowly over the premium paying period, which on our policies are somewhere between 20 and 30 years.
The investment and savings product has a really nice mix of things that are sales-based, really point in time, as well as account-based and asset-based, which are more recurring in nature. You can see in the pie chart in the middle how that mixes out. Again, we like the fact that there's these three sources of revenues because in fluctuations in market conditions, we do have some insulation from the fact that there are these three sources. What's also different about this business from our life insurance business is it's very low capital requiring, very high return business. Virtually everything we earn in this business is free for us to upstream to the holding company to redeploy. You can see on the bottom of the page, we've had really great results in this segment, both from an income perspective as well as our growth in assets.
If you look at the bottom right-hand chart, we've actually had the largest asset growth in this last quarter that we've had since 2008. Since the financial crisis began. We're very pleased with the results we're seeing here, and it continues to be a very robust business for us. One thing I'd highlight, it's not shown on here on that page, but our assets also tend to be stickier than what you'll see in the standard industry, which is one of the reasons why we have such an active relationship and positive relationship with the different fund companies. Our investment portfolio is luckily a page I don't have to spend a lot of time on. We have a very straightforward portfolio. You can see 99% is fixed income. It's highly investment grade. It is rather short in duration.
We are fully cognizant of that and are actually managing that number the way it is. Very different than other insurance companies. We do not have the asset liability matching exposure. Largely because we have so much cash flow and positive cash flow from our premiums, we don't actually have to sell any assets to service our liabilities. We actually can invest the portfolio opportunistically, and so we have intentionally kept it relatively short. You can see on the left-hand side of the page, the mix by asset class and credit quality, really nothing of issue. We have very few risky assets. It's not on this page anymore, but we have, I think about, gross unrealized losses of less than $10 million. Very strong portfolio in a very positive position. Capital strategy.
We've done quite a bit since we left Citigroup about just over two years ago. We did finally this year, execute our inaugural Triple-X reserve financing. I think it was a pretty unique transaction in that it was 14 years. It's a 14-year letter of credit. Which means when that letter of credit expires, we actually have no remaining reserves that are exposed for refinancing risks. We intentionally set this up such that we wouldn't have any kind of rollover risk to deal with. We were able to redeploy about $350 million because of that transaction. The way we redeployed that was by buying $200 million back from Citi and another $150 million back from Warburg Pincus, which is our largest individual shareholder. We have a very high RBC ratio, probably one of the highest in the industry at about 560%.
I will tell you that is not our long-term objective. Our plan is to bring that down closer to 350% over time. Part of the reason it's higher than the long-term target of 350% is because we do expect to continue to have statutory strain as we continue to build back our book of business. We also feel, as you'll see as I get to in a moment, that we have some opportunity to extract additional capital from our life insurance entity. If you just think about our business from a standpoint of stockholder dividends, we are at the low end of the peer group, and we would like to see ourselves more in line. We would target growing up towards 1.5%-2% of a yield, going forward.
As we look at what our opportunities are, as I was just mentioning, we do believe that we have between $130 million and $160 million of capital that we can extract from Primerica Life as an ordinary dividend, so without regulatory pre-approval, in 2013. We also feel like we have about $40 million out of the non-life entities, and that would be really on a recurring basis. Without really doing much of anything, we have somewhere between $170 million and $200 million that we feel that would be available to redeploy next year. Some other things that we would be looking at is potentially refinancing our Citi note. It comes due in 2015.
It's not immediate demand to do so, but with treasuries being where they are, it might make sense for us to go ahead if the markets stabilize, go ahead and refinance that note and potentially do a small upsizing of the debt, really because we feel we have the capacity and because we don't think we'd have to go back to the capital markets anytime in the near future at a size big enough to be an index transaction. We may go ahead and upsize that, but again, nothing substantial, from where we are today from a debt to cap perspective. Really, I think we have set up the situation where we now have achieved regulatory approval for Triple-X transaction. It was an inaugural transaction, quite frankly, for Massachusetts as well.
Now that we've laid that groundwork, we would expect to be able to pull that trigger again. Most likely, the first point to do so would be 2013, where we would have packaged up another two years of book of business, so the 2011 and 2012. Again, I think that will free up a fair amount of capital, probably less than what we freed up in this last Triple-X transaction. Again, a sizable enough chunk that we could really do some very active capital management. Go ahead.
Great. Thanks, Alison. As we prepare to take some questions, if you have any, just let us leave you with a couple of quick highlights. First of all, the hallmark of our business is our distribution capability. It really differentiates us from the other players in the marketplace. The size of the middle market is unique. It's significant. The size of the opportunity because there are no other significant players there is something that's one of our attributes as well. While we have a lot of the positive attributes of the traditional life insurers, we are not typical because of our model and because of the uniquenesses of our business that you've heard described. We've got a tremendous amount of experienced leadership, both in our sales force as well as in our executive team.
We take a conservative financial approach, while we're a relatively new public company, we do have a 34-year track record of success. We've pretty much seen all of the financial conditions and market conditions you could imagine and have managed to successfully operate through those. With those reminders, we're open for questions and see if we take questions from the floor and see what we can do to help out.
Hi, guys. I'm just curious as to why you keep any underwriting whatsoever on the life insurance side and not just distribute some other third party's product.
Do you want to take that?
Yeah. I can give it to you from the sales perspective, then maybe Alison could add a financial aspect to that. We are unique in the size of our sales force, also that we are taking brand new people that have never been in business for themselves, been in a sales position, or been in financial services and introducing them to this concept, this product, and this industry. What that means is we have to create unique products and unique processing capabilities that are streamlined, simplified, and unique to our business model. We have looked at, in some unique situations, distributing others' life insurance products in specific niches of the market. Every time we've done that, we found out because they aren't designed for use by those inexperienced people that are part-time, then it creates a friction in the system that causes it to fail.
The uniqueness of our business means, in addition to it being a wise financial move because we do make a significant amount of money off of it has to be unique to fit our model. The two can't be separated.
Absolutely.
Other questions?
Yeah. I'll ask one more. Just with regards to the Triple-X financing solution, you already reinsure 90% of the mortality risk. Is that LIC sort of matched against the remaining 10%?
Correct. Actually, the transaction that we did earlier this year took what was left post. It included all the back business that was not ceded to reinsurance , excuse me, but was subject to that transaction, as well as the 10% retention that we had on the 2010 block of business. That's what was included. On an ongoing basis, it would take whatever we retained on the ongoing business, so post that transaction.
Other questions? All right. If not, thank you for your time.
Thank you.
Thank you very much.