life insurance
Nov. 6 (Bloomberg) -- Primerica Financial Services, the life insurance business that Citigroup Inc. plans to sell in an initial public offering, may have a starting value of $1.6 billion, according to an analyst at Fox-Pitt Kelton Cochran Caronia Waller.
Citigroup yesterday announced that it would take the life insurance unit, one of the bank’s original businesses, public next year. The stock sale would initially raise as much as $100 million for Citigroup, Primerica said yesterday in a filing. The number of shares and the price weren’t disclosed.
Primerica, which received 92 percent of pretax profits from its life insurance business in the first half of the year, will receive no proceeds from the IPO. The new Primerica will consist of its 100,000 sales representatives, 10 percent to 20 percent of existing life insurance policies and the right to sell/underwrite future insurance and other financial products.
“We believe the ultimate size of the IPO would be larger and depend on the equity market conditions” in the first quarter of 2010, Fox-Pitt analyst David Trone wrote in a note to clients. “Citi will most likely record a relatively small gain on this transaction.”
Chief Executive Officer Vikram Pandit said in January he would sell, wind down or restructure at least eight businesses. Citigroup, 34 percent-owned by the U.S. government after a $45 billion bailout, has been selling units including retail brokerage Nikko Cordial Securities Inc.
Part-time Sales Force
Founded in 1977 by Arthur L. Williams, Primerica sells life insurance and investment products such as mutual funds through a mostly part-time sales force of independent agents. Former Citigroup Chairman Sanford “Sandy” Weill’s Commercial Credit Corp. took control of the firm in 1988, using it as a platform to assemble a financial-services titan.
Primerica will cede 80 percent to 90 percent of the risks and rewards of its life insurance policies in force as of Dec. 31, to three affiliate of Citigroup prior to the completion of the IPO, Primerca said in its prospectus yesterday.
“The revenues and earnings of our term life insurance segment are expected to initially decline in proportion to the amount of revenues and earnings associated with our existing in force book of term life insurance policies ceded to Citi,” the company wrote in its prospectus.
Primerica had net income of $244.7 million through the end of June on revenue of $1.09 billion, according to the filing. New York-based Citigroup, the third-biggest U.S. bank by assets, fell 2 cents to $4.04 at 9:45 a.m. today in New York Stock Exchange trading. It has declined 39 percent this year compared with the 3 percent slide of the 24-company KBW Bank Index.
‘Significant’ Income
Through reinsurance arrangements with Primerica covering term life-insurance policies in place as of Dec. 31, Citigroup will continue to receive a “significant” stream of income from Primerica, the bank said in a statement yesterday.
Primerica is run by co-chief executive officers John Addison, 52, and Rick Williams, 53. The unit has been trying to get away from Citigroup for about a year.
Addison told employees in January that he planned to remove any reference to the parent company on Duluth, Georgia-based Primerica’s business cards, brochures, and marketing materials, people familiar with the company’s plans said at the time.
Primerica was forced to cancel its Atlanta convention in June and trips to the Bahamas and a Florida resort last February amid government pressure after Citigroup received its bailout. The Primerica convention, which attracted 55,000 people in 2007, was scheduled to take place at the Georgia World Congress and the Georgia Dome, home to football’s Atlanta Falcons.
Nov. 6 (Bloomberg) -- Primerica Financial Services, the life insurance business that Citigroup Inc. plans to sell in an initial public offering, may have a starting value of $1.6 billion, according to an analyst at Fox-Pitt Kelton Cochran Caronia Waller.
Citigroup yesterday announced that it would take the life insurance unit, one of the bank’s original businesses, public next year. The stock sale would initially raise as much as $100 million for Citigroup, Primerica said yesterday in a filing. The number of shares and the price weren’t disclosed.
Primerica, which received 92 percent of pretax profits from its life insurance business in the first half of the year, will receive no proceeds from the IPO. The new Primerica will consist of its 100,000 sales representatives, 10 percent to 20 percent of existing life insurance policies and the right to sell/underwrite future insurance and other financial products.
“We believe the ultimate size of the IPO would be larger and depend on the equity market conditions” in the first quarter of 2010, Fox-Pitt analyst David Trone wrote in a note to clients. “Citi will most likely record a relatively small gain on this transaction.”
Chief Executive Officer Vikram Pandit said in January he would sell, wind down or restructure at least eight businesses. Citigroup, 34 percent-owned by the U.S. government after a $45 billion bailout, has been selling units including retail brokerage Nikko Cordial Securities Inc.
Part-time Sales Force
Founded in 1977 by Arthur L. Williams, Primerica sells life insurance and investment products such as mutual funds through a mostly part-time sales force of independent agents. Former Citigroup Chairman Sanford “Sandy” Weill’s Commercial Credit Corp. took control of the firm in 1988, using it as a platform to assemble a financial-services titan.
Primerica will cede 80 percent to 90 percent of the risks and rewards of its life insurance policies in force as of Dec. 31, to three affiliate of Citigroup prior to the completion of the IPO, Primerca said in its prospectus yesterday.
“The revenues and earnings of our term life insurance segment are expected to initially decline in proportion to the amount of revenues and earnings associated with our existing in force book of term life insurance policies ceded to Citi,” the company wrote in its prospectus.
Primerica had net income of $244.7 million through the end of June on revenue of $1.09 billion, according to the filing. New York-based Citigroup, the third-biggest U.S. bank by assets, fell 2 cents to $4.04 at 9:45 a.m. today in New York Stock Exchange trading. It has declined 39 percent this year compared with the 3 percent slide of the 24-company KBW Bank Index.
‘Significant’ Income
Through reinsurance arrangements with Primerica covering term life-insurance policies in place as of Dec. 31, Citigroup will continue to receive a “significant” stream of income from Primerica, the bank said in a statement yesterday.
Primerica is run by co-chief executive officers John Addison, 52, and Rick Williams, 53. The unit has been trying to get away from Citigroup for about a year.
Addison told employees in January that he planned to remove any reference to the parent company on Duluth, Georgia-based Primerica’s business cards, brochures, and marketing materials, people familiar with the company’s plans said at the time.
Primerica was forced to cancel its Atlanta convention in June and trips to the Bahamas and a Florida resort last February amid government pressure after Citigroup received its bailout. The Primerica convention, which attracted 55,000 people in 2007, was scheduled to take place at the Georgia World Congress and the Georgia Dome, home to football’s Atlanta Falcons.
