Primerica IPO Prices High, Sells More Shares

NEW YORK (Reuters) – Citigroup Inc’s (C.N) life insurance unit, Primerica Inc, priced shares in its initial public offering above the expected range in a larger-than-anticipated deal.

The company sold 21.36 million shares for $15 each, raising about $320.4 million. It had planned to sell 18 million shares for $12 to $14 each.

Primerica sells life insurance to lower-middle income and middle-income families with a door-to-door salesforce topping 100,000.

“Primerica has very good brand recognition,” said IPO Boutique Senior Managing Partner Scott Sweet. The company’s balance sheet was solid and the IPO had been priced to insure a strong reception and pave the way for a secondary offering, he added.

Citi expects the public offering to reduce its GAAP assets by about $5 billion during the second quarter, it said in a statement late Wednesday.

Citi, which accepted $45 billion worth of U.S. government bailout funds, is seeking to divest itself of assets that are not part of its core banking business. Like many of the units Citi is trying to unload, Primerica is a holdover from the days of former Chief Executives Sanford Weill and his successor Charles Prince.

Citi tried to sell Primerica last year but failed to find a buyer willing to pay a high enough price. Citi has taken nearly $1 billion in dividends out of the company since 2007 and will take another $622 million before the end of the IPO process.

Citi will take all of the proceeds from the offering and most of Primerica’s existing accounts. Primerica will keep its new policies.

Analysts say that as the economy recovers Primerica’s target audience — households with an annual income of $30,000 to $100,000 — could put more of their money into life insurance products.

Primerica posted net income of about $495 million in 2009 compared with about $168 million a year earlier. Revenue stayed around $2.1 billion.

Private equity firm Warburg Pincus is buying a major stake in the company. Its stake will be 23 percent to 33 percent.

Following the IPO, Citi will beneficially own about 43 percent of Primerica’s common stock and if the underwriters exercise their full over-allotment option, its ownership of Primerica’s stock will be about 39 percent, it said in the statement.

Citi said it intends to divest its remaining interest in Primerica “as soon as is practicable.”

Underwriters were led by Citi. The company is expected to begin trading on the New York Stock Exchange under the symbol “PRI” (PRI.N) on April 1.

(Reporting by Clare Baldwin and Maria Aspan, additional reporting by Anuradha Ramanathan in Bangalore; Editing by Richard Chang and Lincoln Feast)