IPO of Primerica Raises $320.4 Million; Shares Higher in First Trading Day

Citigroup Inc. increased the initial public offering of its Primerica Inc. life insurance unit, pricing Primerica's common stock above a prior range.

In the offering, about 21.4 million shares of Primerica's stock were sold at $15 a share, raising $320.4 million, Citi (NYSE: C) said in a statement. Shares of Primerica's stock started trading April 1 on the New York Stock Exchange under the symbol "PRI." By early afternoon that day, the stock was trading higher, at $19.80 a share.

Last year, the financial services giant announced the IPO of Primerica in what it dubbed an effort to shed "noncore" businesses. The initial price was expected to be from $12 to $14 a share so the IPO was expected to fetch up to $289.8 million (BestWire, March 23, 2010).

Primerica underwrites term life insurance, and offers mutual funds, variable annuities and loans. The company, a distributor of financial products through about 100,000 licensed sales representatives, targets middle-income households in North America (BestWire, Nov. 6, 2009).

An attempt to speak with a Primerica spokesperson was unsuccessful.

Citi said it will own about 43% of Primerica's common stock immediately after the IPO, and after a Feb. 8 agreement to sell shares of Primerica stock, plus warrants to buy Primerica stock to private equity funds managed by Warburg Pincus.

Citi granted an over-allotment option to the underwriters to buy up to an additional roughly 3.2 million shares of Primerica's stock. If the underwriters exercise this option, Citi will own about 39% of Primerica's stock. However, Citi plans to get rid of its remaining interest in the company as soon as it can, depending on market conditions.

Citigroup Global Markets was sole bookrunner on the transaction.

The public offering of Primerica and private sale will reduce its GAAP assets by about $5 billion during the second quarter but in line with its strategy to shrink noncore assets, Citi said.

In late 2008, Citigroup was the recipient of a multibillion-dollar rescue package from the federal government that looked to stanch a potential failure. The aid, which came on top of a $25 billion infusion made by the U.S. Treasury from the Troubled Asset Relief Program, came as market fears were mounting of an imminent failure by Citi (BestWire, Nov. 24, 2008).

This marks the second IPO in the U.S. life insurance industry in 2010. In January, Symetra Financial Corp. (NYSE: SYA), the Bellevue, Wash.-based life insurer and employee benefits company, raised about $282.5 million in net primary proceeds from its IPO, which included 30.4 million shares sold at $12 a share (BestWire, Jan. 29, 2010).

Primerica Life Insurance, National Benefit Life and Primerica Life Insurance Co. of Canada currently have Best's Financial Strength Ratings of A+ (Superior).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])