Operator: And the next question comes from the line of Suneet Kamath with Jefferies.
Suneet Kamath: Just wanted to start with the term lapse rate. Alison, I think on the second quarter call, you gave us some good data in terms of what you saw in the first quarter, I think, 3% to 5%. And what you saw in the second quarter, I think you said 5% to 7%, if those numbers are right, do you have a comparable number for the third quarter? And maybe some color around how lapses trended through the quarter?
Alison Rand: Yes. And it’s interesting. One of the reasons I didn’t put those exact figures, first of all, the numbers have I don’t want to say overly improved, but we have seen where the variances are have shrunk in the number of durations we’re seeing it. So earlier in the year, we really were seeing things vary across the board which really was sort of the economic hit, what was going on in the marketplace. It’s interesting as we’ve analyzed that now, we’re seeing it very specifically in a small number of durations. As I mentioned in my comments, not seeing it on the new business, the new business is really moving in line with our LDTI assumptions. And then on the outer year, say, duration 5 and later, it’s very much in line with the assumptions.
It’s really years 2 to 4. When you look — when you look at those years, what jumps out at me is what I highlighted in the call that these were policies that people bought either right before or during the pandemic — these were people think we’re real — we saw after the pandemic, as we expected, a lot of policies fall off the books pretty quickly. A lot of people did need jerk purposes during the pandemic, and then decided not to keep it post pandemic when they felt fears were gone. I believe these are people, and this is my belief. I believe these are people that really did want to keep their policies and have held on to those COVID acquired policies for as long as they could. But as you’re well aware, all the stimulus packages that were out for a long period of time are now gone, all the aid programs on bloom repayments are gone and just the economy for a lot of people in our marketplace has been challenging.
Cost of living has been challenging. So I see those being the driving factor as to why these particular durations or buckets of policyholders are being atypically impacted. So it’s one of the reasons why I didn’t go ahead and give something overall because unlike the earlier period, where it was really pervasive amongst durations, to me, this is a very specific thing we’re seeing, which we do expect to run off and again, which is why we did not go ahead and change any long-term assumptions under LDTI.
Suneet Kamath: Okay. That makes sense. And then I guess maybe on senior health, it sounds like there’s some incremental challenges, I think, based on reading the press release, some hiring delays. And then I think, Glenn, you had mentioned some higher attrition. And then lastly, I normally think about this business as being sort of profitable in the fourth quarter, but I think you’re guiding to a loss. So maybe just some color around what you’re seeing there. It just feels like maybe it’s not getting kind of back on track like we had kind of hoped it would.
Glenn Williams: Yes. It’s — you’re right about the normal cadence of the business. The fourth quarter is normally the — during AEP, the most significant quarter. And so what we’ve seen is it’s not mysterious in hindsight now that we see it and of course, it was something we were trying to control as we go, but we weren’t able to totally control it is we wanted to grow the size of our sales force by hiring new and also retaining experienced reps. We’ve got — we feel like a good pool of talent out there to hire new but we didn’t retain as many of our experienced salespeople as we wanted to. And so what that’s led to is a larger sales force, but with a newer mix of reps. And the reality is the newer mix of reps are not as efficient.
Their number of sales per leads are not as high. And so that leads to the increase in CAC that we saw in the third quarter. And we’re just anticipating that we’ll see some — see that again in the fourth quarter and lead to a loss in the fourth quarter, a small loss in the fourth quarter rather than a small gain. So it’s a fairly focused issue. We’ve taken all the actions or begun to take all the actions to deal with that. As I mentioned in my prepared remarks, we feel very good about our leadership team that’s in place now, having built or rebuilt that since the acquisition. And so we do have a lot of positives going on. The stability in LTV, we count as an environmental positive that we’re gaining from. It looks like the shopping and churn challenge that we had a couple of years ago that the industry had a couple of years ago has begun to normalize.
So that gives us a much better environment to build the business in. It’s just going to take some more work and take a little longer than we anticipated.
Suneet Kamath: Got it. Maybe just one quick follow-up. What do you think is driving the attrition of the experienced senior health folks?
Glenn Williams: I think it’s a number of factors. I think that it’s a general disruption that Alison talked about in the marketplace and in the economy. I think people are struggling financially and therefore, more likely to look for alternative employment that might give them more upside and a bigger opportunity. And we’ve been — weren’t able to put our finger on any one particular item. Obviously, as we look at all of the retention aspects of our opportunity and compensation and other types of benefits. We’re looking at all of that to make sure that we’re competitive. It wasn’t any particular one item that we could lay our finger on and have a quick fix. It’s just a disruptive environment that we’re operating in.
Operator: And the next question comes from the line of Maxwell Fritscher with Truist Securities.
Maxwell Fritscher: I’m calling in for Mark Hughes. As kind of a broad question about the recruiting environment. It seems as though there is some opportunity for growth considering the payroll numbers from the labor department came in a little cooler than expected, seems like it should be maybe a catalyst, any thoughts there?
Glenn Williams: Yes. Maxwell, it’s interesting. The response I was giving to Suneet about senior health was about our employed sales force at e-TeleQuote, which — where there is — there’s quite a lot of competition for employees. Interestingly enough, the economic disruption actually leads toward more people looking for alternatives. The people that maybe are looking for an alternative to their senior health sales position — that’s true, people looking for alternatives everywhere, which actually helps drive Primerica’s overall independent salesperson recruiting. So the dissatisfaction that’s a headwind for our ETQ business actually is a tailwind for our recruiting of our overall sales force, which is kind of an interesting contradiction.
And so our recruiting is not directly tied to employment. Remember, people are not looking for a job when they come to Primerica that has a paycheck next Friday. They’re looking for an opportunity that they can build over several years. And so we don’t see direct competition generally based on the tightness of the labor market, particularly when that tightness is created by jobs maybe that are not high-quality jobs that are often lower paying where people are employed, but they’re underemployed, that’s the perfect environment for Primerica to recruit to our larger sales force because people are frustrated, they’re unhappy and they’re looking for an alternative that they control. And that’s the attractiveness I mentioned of our entrepreneurial opportunity.
