Primerica, Inc. is a distributor of financial services and sells products
through representatives in the United States, Canada, Puerto Rico and Guam. As
of 2011, it was the largest independent financial services marketing
organization in North America with 90,000 representatives.
On March 15, 2013 the company moved to its new international headquarters at 1
Primerica Parkway, Duluth, Georgia. Primerica conducts business principally
in the United States, Canada and Puerto Rico.
Business model Primerica, Inc. is a multi-level
marketing company which sells financial products and services using a hybrid
model of direct selling, franchising and distribution.
Headquartered in unincorporated Gwinnett County, Georgia, Primerica spun off from
its former parent company Citi through an initial public offering on April 1,
2010. It is a financial services marketing organization in North America
with approximately 90,000 independent representatives, including 22,000
Financial Industry Regulatory Authority Series 6 licensed through Primerica's
securities broker-dealer affiliate PFS Investments, Inc. in the United States,
and through PFSL Investments Canada Ltd. in Canada. The company focuses on the
sale of term life insurance, as well as providing other financial products and
services including mutual funds, annuities, segregated funds, managed
accounts, long-term care insurance, pre-paid legal services, auto insurance,
home insurance, credit monitoring and debt management plans. The company has
more than 4.3 million life insurance clients and over 2 million client
investment accounts. History
Founded in 1977 by Arthur L. Williams, Jr. as A.L. Williams & Associates, the
company established its base by mass-marketing the concept of "Buy Term
and Invest the Difference." With "BTID" the company illustrated how its mostly
middle-income client base could purchase sufficient protection with term life
insurance and systematically save and invest in separate investment vehicles,
such as mutual fund Individual Retirement Accounts. A.L. Williams was
initially established as a privately held general agency, at first selling
term life insurance policies underwritten by Financial Assurance,
Inc.. The company expanded, outgrowing the
capacity of FAI to process its business. In 1980, A.L. Williams entered into a
contract with Boston-based Massachusetts Indemnity and Life Insurance Company, a
larger underwriter of life insurance, whose parent was PennCorp Financial
Services based in Santa Monica. To support A.L. Williams headquartered in
Atlanta, MILICO established a regional office in that city. In 1981, the
company established First American National Corporation as a holding
company for First American Life Insurance and First American National
Securities. In 1982, The A.L. Williams Corporation underwrote a public stock
offering, listed in the Over the Counter market under the symbol ALWC. In 1983,
the company became listed on the NASDAQ exchange under the same symbol.
= Origin of "Primerica" name = PennCorp's growth due to MILICO's
underwriting caught the attention of Bill Woodside, Chairman & CEO of
American Can Company, a former Dow Jones 30 blue chip can and container producing
company based in Greenwich, Connecticut founded in 1901. Due to the growing rise
of plastic as a replacement for aluminum cans, the company looked to acquire
financial services providers and move away from the dying manufacturing
industry, having acquired life insurance holding company Associated Madison from
Gerry Tsai Jr in 1982. With this acquisition Woodside created a new
financial services division for American Can and hired Tsai, who succeeded him as
Chairman & CEO, as the new head. In September 1982, American Can and
PennCorp signed a merger agreement. In 1983, the merger was finalized,
making American Can the parent company of PennCorp and MILICO, signing a new
contract with ALWC through the year 2000. In 1986 Nelson Peltz's Triangle
Industries bought American Can's packaging division, along with rights to
the name of the company. Therefore, on March 6, 1987 American Can announced
that it would change its 86-year-old name to Primerica Corporation, hence
giving birth to the new and currently recognized name "Primerica."
= Acquisition by Commercial Credit = The newly named Primerica Corporation
targeted Smith Barney as the first significant purchase that moved the
company completely into financial services with the May 1987 announcement
of its intent to buy the Wall Street brokerage for $750 million, which would
later end up as Primerica's sister company under Citigroup in 1998.
In 1985, ALWC began the procedure to open business in Canada. After
encountering legal and cultural roadblocks to expanding outside the
United States, ALWC began selling insurance products of Pennsylvania Life
Insurance Company, a Primerica subsidiary, in Canada in 1986.
On November 30, 1988, ALWC acquired MILICO from Primerica Corporation
through a stock merger acquisition for 44.58 million shares of ALWC stock,
making Primerica Corporation the majority shareholder of ALWC. In
December 1988, Sanford Weill's Commercial Credit acquired Primerica
Corporation for $1.54 billion, retaining the Primerica name. At this time, the
major businesses under Primerica Corporation were A.L. Williams, Smith
Barney and Commercial Credit. On February 6, 1989, Primerica Corporation
began trading on the New York Stock Exchange.
= Travelers and Citigroup era = In November 1989, Primerica purchased
the remaining 30% of ALWC that it did not previously own and the privately
held General Agent, A.L. Williams, Inc. In 1991, Primerica Corporation changed
the name of A.L. Williams to Primerica Financial Services. The following year
MILICO, Primerica's life insurance underwriter, changed its name to
Primerica Life Insurance Company, and its broker-dealer FANS changed to PFS
Investments, Inc. In December 1993, Primerica acquired the
remaining 73% of Travelers Insurance Corporation and adopted the name
Travelers Inc., which was changed to Travelers Group the following year.
Travelers Group included Primerica Financial Services, Smith Barney,
Travelers Life and Annuity, Travelers Property/Casualty, Commercial Credit and
other financial businesses. Joe Plumeri was Chairman and CEO of
Primerica Financial Services from 1995 to 1999. In 1998, Primerica had net
income of $398 million on net sales of $1.65 billion, compared to a 1994 $209
million net income on net sales of $1.28 billion.
In December 1997, Primerica announced it was going to begin offering pre-paid
legal through Pre-Paid Legal Services, Inc., at the time both subsidiaries of
Travelers Group, Inc. In 1998, the U.S. Securities and
Exchange Commission censured and fined PFS Investments Inc., the securities arm
for Primerica, for failure to properly supervise a group of registered
representatives in Dearborn, Michigan. The SEC found that PFS Investments Inc.
had failed to have in place effective policies and procedures to follow up
adequately on three complaints received about the Dearborn registered
representatives, "selling away" activities. Prior to the SEC's ruling,
PFS Investments Inc. hired an independent consultant to review its
supervisory and compliance policies and procedures to prevent and detect
violations of the federal securities laws. By the date of the ruling, PFS
Investments reported it had complied with the final recommendations made by
the independent consultant. In 1998, Travelers Group and banking
giant Citicorp merged creating Citigroup. Primerica and its affiliates
continued to operate as subsidiaries of Citigroup, although the Travelers
insurance business was spun off in 2002. Along with Primerica, other major brand
names under Citigroup included Citibank, CitiFinancial, Citicorp Trust Bank,
Smith Barney, and Banamex. Long-time veteran executives John
Addison and Rick Williams, whom Art Williams quoted in his book Coach as
"two true sons of A.L. Williams", were hired as co-CEOs in 2000, with Glen
Williams promoted to President in 2005. = Separation from Citi =
Citigroup attempted to sell Primerica in 2008, having received several bids from
life insurance companies and private equity firms interested in buying. At
the time the market value of the company was estimated to be $7 billion, roughly
15 times its annual earnings and Citi was trying to match various bidders in
groups that could bid for the unit together. Initially, a sale to JC
Flowers & Co. LLC and Protective Life Corp was underway until the deal was
canceled last minute for publicly undisclosed reasons.
In May 2009 the Primerica executive team led by co-CEOs John Addison and Rick
Williams approached private equity firm J.C. Flowers & Co. yet again, as well as
Blackstone Group LP and TPG Inc in a new attempt to have the company bought,
a plan which Citigroup did not endorse. = Initial Public Offering =
On November 5, 2009 Citi announced that it intended to spin off Primerica
through an initial public offering. The Primerica executive and legal team filed
an S-1 with the U.S. Securities and Exchange Commission, having officially
publicly announced the intention of becoming a public company. Citi would
claim all profit from the primary offering, as well as continue to receive
income from a significant portion of existing Primerica business, with Citi
Holdings CEO Michael Corbit claiming the move to be "the best separation
alternative for this franchise. Primerica filed a final amended S-1 and
preliminary prospectus with the SEC on March 17, 2010, indicating that it will
offer 18 million shares to the public through the IPO, with underwriters
having the option to purchase an additional 2.7 million shares. The first
trading occurred on April 1, 2010. Initially, the expected share price was
in the $12 – $14 range, having ended up being priced $15 a share on March 31,
2010, resulting in Citi raising 27 percent or $30 million more than $290
million projected through the IPO by selling 3.36 million more shares than
the anticipated 18 million. The first day of trading saw the stock surge 31
percent to end up closing at $19.65 a share. In a separate offering, Private
equity firm Warburg Pincus has bought 17.2 million shares, resulting in a 23
percent stake in Primerica, and up to 33 percent if Warburg decides to exercise
warrants to purchase an additional 4.3 million shares from Citi. Following the
IPO, Citi's stake was between 32 percent and 46 percent and expected to divest
its interest in Primerica "as soon as possible" to fulfill its original goal
of raising cash by shedding assets to improve financial performance.
On December 19, 2011, Citigroup sold its remaining equity stake in Primerica,
completing the separation from Citi. Technology
In 2005 Primerica began using Palm-based smartphone applications, using the name
TurboApps, to allow representatives to obtain insurance quotes and file life
insurance applications electronically. TurboApps was later expanded to support
the Windows Mobile platform. In November 2011, Primerica released the Primerica
App, which allows representatives to provide insurance quotes to clients
without the need for online connectivity.
Awards Primerica Life Insurance Company, and
its New York subsidiary, National Benefit Life, have received several
awards from A. M. Best, Standard & Poor's and the Insurance Marketplace
Standards Association for their financial strength, high standards and
quality business. Primerica has also received awards for
Customer Service. See also
Brokerage firm Financial institution
References Sources
Primerica Primerica, viewed July 7, 2012 New Georgia Encyclopedia NGE, viewed
November 7, 2006 External links
Primerica, Inc.