Primerica for sale? Not Any more!
If you have been on my blog and been checking comments once in a while, you probably noticed that some people argue (sometimes really hard) about Primerica and my point of view to know if Primerica is a scam or not. After several post about this company and discussion with Primerica agent, I have come to the conclusion that Primerica is not a scam but it is not for everyone also.
You probably heard that Primerica is for sale by Citigroup. In fact, Citigroup is looking to sell Primerica since they urgently need more cash flow to maintain their business model. I have made some great contacts within the company since I wrote my Primerica Series. I must admit that I have probably more friends than foes within Primerica One of them contacted me earlier this week to tell me that Primerica has been sold!
It will actually be announced later on this week (or maybe today!) and this is why I decided to post this article at midnight to make sure I was the first one to publish this big news: Primerica has been bought by… Berkshire Hathaway!
The Company managed by Warren Buffett is known to buy solid and cash flow positive assets. This is why Berkshire Hathaway decided to buy Primerica. Citigroup desperately need cash to keep going in the economic turmoil and certainly didn’t want to disappoint investors since their announcement back in March that the first two months of activities in 2009 have been lucrative.
This is actually a good trade for both parties. Berkshire is acquiring a solid and well built cash machine that will keep producing a good income flow for many years. Regardless if you like Primerica or not, you must admit that their business model is made to make good cash; they pay only if you sell and they spend little to no money into marketing approach (since they use the word of mouth and their own employees to recruit). They actually are one of the most lucrative assets owned by Citigroup right now.
On the other side, Citigroup will receive enough money to re-establish his status of the biggest bank in the world and going forward. Since cash is king and banks are definitely looking for more these days, the sale of Primerica will allow Citigroup to breath again and concentrate no their business instead of looking for other ways to get more financing from months to months. This will stabilize the whole company and will probably be seen as really good news on the market.
It appears that Berkshire would terminate the contracts with Primerica representative in order to switch most of the life insurance contracts to another of its company!
The price of the sale has not been announced yet, it will probably be declared during a press conference later on this week. If you know more details than I do, please share them with us!
EDIT AS OF 2009-11-05: PRIMERICA IS GOING PUBLIC! (AND THIS IS NOT A JOKE!)
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