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I'm an individual investor and trader. I'm currently retired. My professional work experience has been in commercial real estate, working for a major supermarket company and for an urban development corporation. Bear_Mkt is my pseudonym -- bear seems to be my usual investing view. Don't take... More
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  • Why an IPO for Citigroup's Primerica unit makes sense 10 comments
    May 13, 2009 5:27 AM | about stocks: C

    Bloomberg reports that Primerica's management team is looking to buy the insurer out of the failing Citibank empire. Citibank failed in its own efforts to sell Primerica, likely because buyers were hoping for a fire sale price. I wish Primerica's team success.

    Primerica is a financial sales operation, specializing in term life insurance and financial products and targeting middle-income families. Its relies on an army of 100,000 part-time sales agents.

    The Primerica operation, unlike much of Citicorp, is a solidly profitable operation earning $355 million on $2.2 billion sales last year.  According to ratings at The Street as re-published by Weiss Research, Primerica retains high ratings for safety.

    Its parent, Citicorp, has been effectively nationalized by the US government and is subject to the whims of the US Congress and witch hunts by the press. Primerica is doing fine, but could become a poster child for why the US Government can't run a business.

    Case in point: Citicorp wisely cancelled several Primerica conventions in Georgia and the Bahamas, surely avoiding bad press and Congressional fury over "expensive junkets with taxpayer dollars." Smart move if you are a bail-out bank.

    So what's wrong with that? Well, most of Primerica's agents are not employees, but  part-timers, working for commissions. They are not highly paid executives with big salaries and bonuses who take off Thursdays for golf. Primerica relies on keeping its massive army of part-timers highly motivated. And one of its best motivators is the lure of going to a convention or winning a trip to a nice location. For every agent who might win a trip, a dozen or two are motivated by the possibility of winning one.

    When fear of political repercussions killed off some of those rewards, it saved money. It also killed off part of the workforce's motivations to make that extra sale.  In the long run, a less-motivated sales force will destroy a marketing-driven business like Primerica.

    Primerica's managers are wise to pull it out of Citigroup before political interference takes a further toll. If they do an IPO to finance it, I'll be reading the prospectus. Just my opinion.

    Disclosure: long Citigroup.

    ============
    Citigroup’s Primerica Is Said to Seek Bids for Marketing Arm
    http://www.bloomberg.c...

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Comments (10)
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  • andert1
    , contributor
    Comment (1) | Send Message
     
    This is one of the most fair an honest articles I have ever seen about Primerica and the situation with Citi I have ever seen, well done.
    20 Sep 2009, 10:56 AM Reply Like
  • John Debba
    , contributor
    Comments (3) | Send Message
     
    If Citi, like many other financials, were capable of running a business then there would be no need for government in their business. I for one am glad the government saved what value remained of my Citi shares, notwithstanding several canceled Primerica conventions in Georgia and the Bahamas.

     

    Regards, John Debba
    5 Nov 2009, 05:29 PM Reply Like
  • Snowball
    , contributor
    Comment (1) | Send Message
     
    This is a great day for Primerica and anyone who is either a client or a representitve of the company. Thank you for an honest and unbiased comment about the IPO. It will be interesting to watch this all play out and see how this company who has had its fair share of hard knocks, will emerge from this process. There are thousands of very excited representatives in Primerica tonight!!
    5 Nov 2009, 07:31 PM Reply Like
  • pfsfan
    , contributor
    Comment (1) | Send Message
     
    I believe that the announcement of the IPO (initial public offering) is the final piece of the dream that Art Williams expressed over his years of tenure as the leader of the A.L.Williams company.
    Art said his dream was to build a company the will allow us to control our own destiny, a company that could give ownership to its Regional Vice Presidents, and a company that produced more financially independent families than any other in history. I believe in many ways the second and third parts of his dream are here today. I believe because of this IPO that the illusive part of his dream to build a company that allows us to control our own destiny is finally going to be a reality. I believe that we are a company of destiny. I believe that because we do what is right 100% of the time that we are blessed in so many ways. I know if the economic climate had not been a difficult as it is that there is no way this opportunity would have presented itself. I am so grateful that we are here now. I am so excited about the possibilities that exist for every person in the company. Make no mistake, the people that will reap the greatest rewards from this new era will be those that are growing the number of productive Regional Vice Presidents in their organizations.
    5 Nov 2009, 11:46 PM Reply Like
  • Claudia Ingram
    , contributor
    Comment (1) | Send Message
     
    This article was pleasant to the eye and the mind as I read it.
    The business made a difference in my family life and still is to this
    day. Thank you for staying the fact with truth and direction.
    16 Mar 2010, 05:23 PM Reply Like
  • team freedom
    , contributor
    Comments (2) | Send Message
     
    A new day and truly a company of destiny-thank you Lord for Your direction. Now let's go out and save lives and be a significant difference in a confused and demoralized country. Thanks Art, our foundation is strong because of you. Wow.
    17 Mar 2010, 12:48 PM Reply Like
  • seaweed2009
    , contributor
    Comments (2) | Send Message
     
    Will C shareholders get any spun-off shares of the new IPO I wonder? Are there details out there? Or im guessing C might just keep the cash proceeds and the current shareholders of C wont get any spun off shares? (Spin-offs are very unfair when they are done like that -they shouldn't be allowed to do it or there should be regulations controlling those type (side) deals. Im talking in general but I would also like some Primerica shares at the same time.

     

    If I wanted cash I wouldn't be buying stocks to begin with. Save the risk.

     

    I feel some of the spin-offs done in the past over the years by some companies account to little more than legal corruption ( in my layman humble opinion) notwithstanidng shareholder approvals coz the institutions control those votes, obviously not me with my measely 100 shares.

     

    Long C
    17 Mar 2010, 08:19 PM Reply Like
  • acctkare
    , contributor
    Comment (1) | Send Message
     
    GO PRIMERICA!! So happy that I am part of this great organization. Well said article above, and you're right about the incentives but it's not just the trips, it's the pats on the back and recognition that seems to drive us as well as the fact that we always do what is right for the client. And that is a company that I would take stock in.
    25 Mar 2010, 04:58 PM Reply Like
  • TimeshareJuice
    , contributor
    Comments (3) | Send Message
     
    Well done. Astute points on a smart move by both companies. Put aside your biases on the company for 1 sec - PRI is a cash machine and so consistent you can set your watch to it. Look at the year to year numbers-amazing! The valuation is $1B for a company earning $500MM EBIT? You'll see 2x and 3x in first 30 days of issue. Put your seatbelt on.
    27 Mar 2010, 01:36 PM Reply Like
  • Alex2005
    , contributor
    Comment (1) | Send Message
     
    I am not an agent , i just don't see my self doing something that nature, but what this company have done is truly changed my life.Thank you Primerica, if wasnt for you guys i would be so lost with my 4 kids after my wife passed away . Because of you i will be debt free in 7 more years and before your Financial Plan i thought i will be working till i die.
    Thank you and so proud to be your client
    Alex
    1 Apr 2010, 11:58 PM Reply Like
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