November 17, 2009, 5:31 am

More Thoughts on Primerica IPO

by: The Financial Blogger    Category: Business,Career,Investment, Market and Risk,Trading
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A little bit more than a week ago, Citigroup announced that they would sell 100M$ worth of shares during the first Primerica IPO. Last year, they tried to sell the company and were unsuccessful, since then they have decided to “pull a few bucks” out of their cash cow.

Over last weekend, I spoke with my friend who still works for Primerica and I asked him if he was nervous about the concerns I outlined in my post about Primerica going public. He told me that he wasn’t nervous at all.  Actually, the news was not introduced to the agents with the same information.

While the Primerica IPO information from Bloomberg last week was quite limited (the journalist spent more time describing Primerica and explaining the timeline than talking about the IPO), my friend received more detailed information.

Primerica goes public… for a second time

This fact was confirmed by another Primerica contact, it is the second time that an IPO was issued for this company. Primerica was founded in 1977 by A.L. Williams . At one point in time, Primerica had over 250,000 agents and decided to go public (for the first time) under the ticker ALW.

Then, Citibank (the former appellation of Citigroup) bought all the Primerica shares and took it private again within the Citi family. At that time, they had decided to trim the Primerica sales force and change the name of the game for insurance agents. This is why many of them either quit or were invited to to pursue other career options. They went from 250,000 agents down to about 80,000.

The main goal behind buying Primerica was to benefit from the huge sales force and not only offer insurance and investment services but all banking products (bank accounts, loans, lines of credit, mortgages, etc.). As of today, that vision has been a partial success since most Primerica agents didn’t offer all products. Time has changed, and so did the vision, so I was told.

It’s good news overall

My friend was telling me that the IPO was pretty good news as most shares will be offered (and probably bought) buy Primerica VPs. Therefore, they will regain more control over “their” company and will try to dissociate themselves from Citigroup (who might not have the greatest image to be associated with these days).

Who knows, at one point (this will require additional public offerings), they might even offer products other than Citi’s. This could transform them into real insurance brokers and offer even better (less expensive?) products.

While 100$M shares is just opening the door to a world of opportunities, this won’t change much in the day to day for now. If Primerica VPs can afford to buy all the shares and remain in control, I guess this could be very good news for them. It is interesting to see how news can been seen from 2 different perspectives, both with valid arguments. Only the future will tell us if the Primerica IPO was a good thing or not!

One thing is for sure, once Primerica shares hit the public floor, it will generate some interest for stock traders and will show on their track investment apps!

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I don’t think I can support Citi after they accepted $45 billion in gov’t assistance, and then proceed to raise executive salaries by 50%.


by: The Financial Blogger | November 17th, 2009 (9:02 am)

You got a pretty good point!

This is probably the best way to “penalize” a company for bad management. Unfortunately, we don’t weight enough in the balance!

Every little bit counts!