Primerica Financial Services
Encyclopedia
Primerica, Inc. is a referral marketer of 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 100,000 or more independent representatives
, including 22,000 Financial Industry Regulatory Authority
(FINRA) 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 various financial products and services through its affiliates that have been added over the years, including mutual fund
s, variable annuities, segregated fund
s, managed accounts, loans, long-term care insurance, pre-paid legal services
, auto insurance, home insurance
, credit monitoring and debt management plans. Its client base was in excess of 6.3 million as of 2010.
Primerica conducts business principally in the United States
, Puerto Rico
, Canada
and Spain
.
as A.L. Williams & Associates (A.L. Williams), the company established its base by mass-marketing the concept of "Buy Term and Invest the Difference
." With "BTID" the company claimed 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 Account
s. A.L. Williams was initially established as a privately held general agency, at first selling term life insurance
policies underwritten by Financial Assurance, Inc. (FAI).
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 (MILICO), 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 (later renamed The A.L. Williams Corporation) as a holding company for First American Life Insurance (later renamed A.L. Williams Life Insurance Company) and First American National Securities (later renamed PFS Investments, Inc). In 1982, The A.L. Williams Corporation (ALWC) underwrote a public stock offering, listed in the Over the Counter
(OTC) market under the symbol ALWC. In 1983, the company became listed on the NASDAQ
exchange under the same symbol.
, 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."
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, Sandy 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
.
, 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 & CEO of Primerica Financial Services from 1995 to 1999. He ran PFS giving 10 to 20 speeches a week around the country, rallying salespeople, and hosting his own monthly TV talk show, which was beamed from PFS headquarters to agents nationwide. He gave a five-hour speech at one meeting, pausing only to change his sweat-soaked shirt. 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 (SEC) 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.
Primerica held its 30th Anniversary Convention August 1, 2007 through August 4, 2007 in Atlanta, Georgia
in the Georgia Dome
and the Georgia World Congress Center
. An estimated 55,000 representatives attended. Primerica Secure was introduced at the event, as well as the newest term life insurance product, Custom Advantage. Notable speakers included former Chairman & CEO of Citigroup Charles Prince, founder of Pre-Paid Legal Services, Inc. Harland Stonecipher, as well as Georgia Governor Sonny Perdue
.
Due to the general economic downturn and Citigroup's acceptance of government bailout funds totaling nearly $45 billion in 2008, in February 2009 its management decided to cancel Primerica's 2009 convention and a trip to the Atlantis Resort
in the Bahamas for top agents, days before the trip was to take place. However, in spite of the cancellation, Primerica's executives in August 2009 announced the company was holding two new trips for top producers within the company to Maui
and Las Vegas
planned to occur back to back in February 2010. It was stated that the trips would be fully funded from Primerica profits, and that this justified the merits of the sales force.
The company announced on June 17, 2010 that it will hold its biannual convention in the Georgia Dome June 15–18 in 2011. This will mark the first time since its acquisition by the Primerica Corporation in 1990 the company has had one as an independent entity. It is expected to attract around 60,000 attendees.
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.
Primerica through an initial public offering
. The Primerica executive and legal team filed an S-1
with the U.S. Securities and Exchange Commission (SEC), 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. It is expected Citi will have a stake between 32 percent and 46 percent and will divest its interest in Primerica "as soon as possible" to fulfill its original goal of raising cash by shedding assets to improve financial performance.
In the summer of 2009, Primerica's IT department started rolling out its line of TurboApps software on the windows mobile
platform. With this change, wireless submission of applications is now possible.
has the company rated AA as "Very Strong." The Insurance Marketplace Standards Association, a non-profit organization based out of Bethesda, Maryland
with the intent to create ethical standards for the insurance industry, has renewed qualification for Primerica Life and National Benefit Life for high standards and quality business, "continuing dedication to ethical business practices."
In 2010, Primerica received a Dalbar Service Award from Dalbar, Inc., a client service rating organization, for Primerica's customer service in mutual funds.
In 2009 the Better Business Bureau changed their rating system from “satisfactory/unsatisfactory” to an letter-based rating. Primerica received an A+ rating from the BBB, and is also a BBB Accredited Business since January 1, 1980.
Direct selling
Direct selling is the marketing and selling of products directly to consumers away from a fixed retail location. Peddling is the oldest form of direct selling. Modern direct selling includes sales made through the party plan, one-on-one demonstrations, and other personal contact arrangements as...
, franchising
Franchising
Franchising is the practice of using another firm's successful business model. The word 'franchise' is of anglo-French derivation - from franc- meaning free, and is used both as a noun and as a verb....
and distribution
Distribution (business)
Product distribution is one of the four elements of the marketing mix. An organization or set of organizations involved in the process of making a product or service available for use or consumption by a consumer or business user.The other three parts of the marketing mix are product, pricing,...
.
Headquartered in unincorporated
Unincorporated area
In law, an unincorporated area is a region of land that is not a part of any municipality.To "incorporate" in this context means to form a municipal corporation, a city, town, or village with its own government. An unincorporated community is usually not subject to or taxed by a municipal government...
Gwinnett County
Gwinnett County, Georgia
, Gwinnett County had a population of 805,321. The racial and ethnic composition of the population was 53.3% white , 23.6% black , 2.7% Korean, 2.6% Asian Indian, 2.0% Vietnamese, 3.3% other Asian, 0.1% Pacific Islander, 8.8% some other race and 3.1% from two or more races...
, Georgia
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
, Primerica spun off
Spin out
A spin-out, also known as a spin-off or a starburst, refers to a type of corporate action where a company "splits off" sections of itself as a separate business....
from its former parent company
Holding company
A holding company is a company or firm that owns other companies' outstanding stock. It usually refers to a company which does not produce goods or services itself; rather, its purpose is to own shares of other companies. Holding companies allow the reduction of risk for the owners and can allow...
Citi through an initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
on April 1, 2010. It is a financial services marketing organization in North America with 100,000 or more independent representatives
Independent contractor
An independent contractor is a natural person, business, or corporation that provides goods or services to another entity under terms specified in a contract or within a verbal agreement. Unlike an employee, an independent contractor does not work regularly for an employer but works as and when...
, including 22,000 Financial Industry Regulatory Authority
Financial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
(FINRA) Series 6
Series 6
The Investment Company Products/Variable Life Contracts Representative Exam, commonly referred to as the Series 6, is a multiple choice exam that registers an individual to transact a limited set of securities:* Mutual funds...
licensed through Primerica's securities
Security (finance)
A security is generally a fungible, negotiable financial instrument representing financial value. Securities are broadly categorized into:* debt securities ,* equity securities, e.g., common stocks; and,...
broker-dealer
Broker-dealer
A broker-dealer is a term used in United States financial services regulations. It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers....
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
Term life insurance
Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or...
, as well as providing various financial products and services through its affiliates that have been added over the years, including mutual fund
Mutual fund
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
s, variable annuities, segregated fund
Segregated fund
A Segregated Fund is a type of investment fund administered by Canadian insurance companies in the form of individual, variable life insurance contracts offering certain guarantees to the policyholder such as reimbursement of capital upon death. As required by law, these funds are fully...
s, managed accounts, loans, long-term care insurance, pre-paid legal services
Pre-paid legal services
A pre-paid legal service is an individual or group low-cost insurance provider for specific, limited legal services from participating law firms and attorneys at costs considerably less than independently hiring these providers...
, auto insurance, home insurance
Home insurance
Home insurance, also commonly called hazard insurance or homeowner's insurance , is the type of property insurance that covers private homes...
, credit monitoring and debt management plans. Its client base was in excess of 6.3 million as of 2010.
Primerica conducts business principally in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
and Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
.
History
Founded in 1977 by Arthur L. Williams, Jr.Arthur L. Williams, Jr.
Arthur L. "Art" Williams, Jr. is a billionaire insurance executive living in Palm Beach, Florida. He is the founder of A.L. Williams & Associates, known as Primerica Financial Services since 1991.-Early life and education:...
as A.L. Williams & Associates (A.L. Williams), the company established its base by mass-marketing the concept of "Buy Term and Invest the Difference
Buy term and invest the difference
Buying term and investing the difference is a concept involving term life insurance and investment strategies that allows individuals to eventually "self Insure" and provides an alternative to permanent life insurance. Generally speaking term insurance premiums are considerably less expensive in...
." With "BTID" the company claimed 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 Account
Individual Retirement Account
An individual retirement arrangement is the blanket term for a form of retirement plan that provides tax advantages for retirement savings in the United States...
s. A.L. Williams was initially established as a privately held general agency, at first selling term life insurance
Term life insurance
Term life insurance or term assurance is life insurance which provides coverage at a fixed rate of payments for a limited period of time, the relevant term. After that period expires coverage at the previous rate of premiums is no longer guaranteed and the client must either forgo coverage or...
policies underwritten by Financial Assurance, Inc. (FAI).
The company expanded, outgrowing the capacity of FAI to process its business. In 1980, A.L. Williams entered into a contract with Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
-based Massachusetts Indemnity and Life Insurance Company (MILICO), a larger underwriter of life insurance, whose parent was PennCorp Financial Services based in Santa Monica
Santa Mônica
Santa Mônica is a town and municipality in the state of Paraná in the Southern Region of Brazil.-References:...
. 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 (later renamed The A.L. Williams Corporation) as a holding company for First American Life Insurance (later renamed A.L. Williams Life Insurance Company) and First American National Securities (later renamed PFS Investments, Inc). In 1982, The A.L. Williams Corporation (ALWC) underwrote a public stock offering, listed in the Over the Counter
Over-the-counter (finance)
Within the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....
(OTC) market under the symbol ALWC. In 1983, the company became listed on the NASDAQ
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
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 CompanyAmerican Can Company
The American Can Company was a manufacturer of tin cans. It was a member of the Tin Can Trust, that controlled a "large percentage of business in the United States in tin cans, containers, and packages of tin." It was formerly a member of the Dow Jones Industrial Average from 1959–1991, though...
, a former Dow Jones 30
Dow Jones Industrial Average
The Dow Jones Industrial Average , also called the Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index, and one of several indices created by Wall Street Journal editor and Dow Jones & Company co-founder Charles Dow...
blue chip can and container producing company based in Greenwich, Connecticut
Greenwich, Connecticut
Greenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
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
Gerald Tsai
Gerald Tsai Jr. was a financier and fund manager who pioneered the use of performance funds in money management during the 1950s and 1960s, and later turned a canning company into financial services giant Primerica...
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
Nelson Peltz
Nelson Peltz is an American businessman. He is a board director of Wendy's Group, the franchise parent of T.J. Cinnamons, Pasta Connection and Wendy's. Peltz is the former owner of Snapple.- Background :...
'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 BarneySmith Barney
Morgan Stanley Smith Barney is a retail brokerage joint venture between Morgan Stanley and Citigroup.On January 13, 2009, Morgan Stanley and Citigroup announced that Citigroup would sell 51% of Smith Barney to Morgan Stanley, creating Morgan Stanley Smith Barney, which was formerly a division of...
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
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. 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
Stock swap
A stock swap, also known as a share swap, is a business takeover or acquisition in which the acquiring company uses its own stock to pay for the acquired company. Each shareholder of the newly acquired company receives a certain number of shares of the acquiring company's stock for each share of...
acquisition for 44.58 million shares of ALWC stock
Stock
The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...
, making Primerica Corporation the majority shareholder of ALWC. In December 1988, Sandy 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
New York Stock Exchange
The New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
.
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 AgentGeneral Agent
A General Agent is an agent, i.e., representative of another, who has a mandate of general nature.-Colonial use:In the Niger Rivers District the only Senior Agent, who administered the region for the National African Company Limited , was promoted in 1882 to become the first...
, 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
Broker-dealer
A broker-dealer is a term used in United States financial services regulations. It is a natural person, a company or other organization that trades securities for its own account or on behalf of its customers....
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
Smith Barney
Morgan Stanley Smith Barney is a retail brokerage joint venture between Morgan Stanley and Citigroup.On January 13, 2009, Morgan Stanley and Citigroup announced that Citigroup would sell 51% of Smith Barney to Morgan Stanley, creating Morgan Stanley Smith Barney, which was formerly a division of...
, Travelers Life and Annuity, Travelers Property/Casualty, Commercial Credit and other financial businesses.
Joe Plumeri was Chairman & CEO of Primerica Financial Services from 1995 to 1999. He ran PFS giving 10 to 20 speeches a week around the country, rallying salespeople, and hosting his own monthly TV talk show, which was beamed from PFS headquarters to agents nationwide. He gave a five-hour speech at one meeting, pausing only to change his sweat-soaked shirt. 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
Pre-paid legal services
A pre-paid legal service is an individual or group low-cost insurance provider for specific, limited legal services from participating law firms and attorneys at costs considerably less than independently hiring these providers...
through Pre-Paid Legal Services, Inc., at the time both subsidiaries
Subsidiary
A subsidiary company, subsidiary, or daughter company is a company that is completely or partly owned and wholly controlled by another company that owns more than half of the subsidiary's stock. The subsidiary can be a company, corporation, or limited liability company. In some cases it is a...
of Travelers Group, Inc.
In 1998, the U.S. Securities and Exchange Commission (SEC) 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
Citigroup
Citigroup Inc. or Citi is an American multinational financial services corporation headquartered in Manhattan, New York City, New York, United States. Citigroup was formed from one of the world's largest mergers in history by combining the banking giant Citicorp and financial conglomerate...
. 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
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
, CitiFinancial, Citicorp Trust Bank, Smith Barney
Smith Barney
Morgan Stanley Smith Barney is a retail brokerage joint venture between Morgan Stanley and Citigroup.On January 13, 2009, Morgan Stanley and Citigroup announced that Citigroup would sell 51% of Smith Barney to Morgan Stanley, creating Morgan Stanley Smith Barney, which was formerly a division of...
, 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.
Conventions
Georgia (U.S. state)
Georgia is a state located in the southeastern United States. It was established in 1732, the last of the original Thirteen Colonies. The state is named after King George II of Great Britain. Georgia was the fourth state to ratify the United States Constitution, on January 2, 1788...
in the Georgia Dome
Georgia Dome
The Georgia Dome is a domed stadium located in Atlanta, Georgia, United States, between downtown to the east and Vine City to the west. It is primarily the home stadium for the NFL Atlanta Falcons and the NCAA Division I FCS Georgia State Panthers football team. It is owned and operated by the...
and the Georgia World Congress Center
Georgia World Congress Center
The Georgia World Congress Center or GWCC is the major convention center in Atlanta. It is the fourth-largest convention center in the United States at 3.9 million ft2 and hosts more than a million visitors each year. At the time opened in 1976 the Georgia World Congress Center was the first state...
. An estimated 55,000 representatives attended. Primerica Secure was introduced at the event, as well as the newest term life insurance product, Custom Advantage. Notable speakers included former Chairman & CEO of Citigroup Charles Prince, founder of Pre-Paid Legal Services, Inc. Harland Stonecipher, as well as Georgia Governor Sonny Perdue
Sonny Perdue
George Ervin "Sonny" Perdue III, was the 81st Governor of Georgia. Upon his inauguration in January 2003, he became the first Republican governor of Georgia since Benjamin F. Conley served during Reconstruction in the 1870s....
.
Due to the general economic downturn and Citigroup's acceptance of government bailout funds totaling nearly $45 billion in 2008, in February 2009 its management decided to cancel Primerica's 2009 convention and a trip to the Atlantis Resort
Atlantis Paradise Island
The Atlantis Paradise Island is a resort and waterpark located on Paradise Island, The Bahamas. Officially opened in 1998, the resort was created by South African hotel magnate Sol Kerzner and Kerzner International Limited. Paradise Island first opened its Coral and Beach Towers as the Trump...
in the Bahamas for top agents, days before the trip was to take place. However, in spite of the cancellation, Primerica's executives in August 2009 announced the company was holding two new trips for top producers within the company to Maui
Maui
The island of Maui is the second-largest of the Hawaiian Islands at and is the 17th largest island in the United States. Maui is part of the state of Hawaii and is the largest of Maui County's four islands, bigger than Lānai, Kahoolawe, and Molokai. In 2010, Maui had a population of 144,444,...
and Las Vegas
Las Vegas metropolitan area
The Las Vegas Valley is the heart of the Las Vegas-Paradise, NV MSA also known as the Las Vegas–Paradise–Henderson MSA which includes all of Clark County, Nevada, and is a metropolitan area in the southern part of the U.S. state of Nevada. The Valley is defined by the Las Vegas Valley landform, a ...
planned to occur back to back in February 2010. It was stated that the trips would be fully funded from Primerica profits, and that this justified the merits of the sales force.
The company announced on June 17, 2010 that it will hold its biannual convention in the Georgia Dome June 15–18 in 2011. This will mark the first time since its acquisition by the Primerica Corporation in 1990 the company has had one as an independent entity. It is expected to attract around 60,000 attendees.
Separation from Citi
Citigroup attempted to sell Primerica in 2008, having received several bids from life insurance companies and private equityPrivate equity
Private equity, in finance, is an asset class consisting of equity securities in operating companies that are not publicly traded on a stock exchange....
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
JC Flowers
J.C. Flowers & Co. is a private equity investment firm, focused on investments in the financial services sector. The firm, founded in 2001, is based in New York City and run by billionaire J. Christopher Flowers, a former Goldman Sachs partner....
and Protective Life Corp
Protective Life
Protective Life Corporation, headquartered in Birmingham, Alabama, is a Fortune 1000 holding company whose subsidiaries provide financial services through the production, distribution, and administration of insurance and investment products. Protective Life Insurance Company was founded in 1907 by...
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 offSpin out
A spin-out, also known as a spin-off or a starburst, refers to a type of corporate action where a company "splits off" sections of itself as a separate business....
Primerica through an initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
. The Primerica executive and legal team filed an S-1
Form S-1
Form S-1 is an SEC filing used by public companies to register their securities with the U.S. Securities and Exchange Commission as the "registration statement under the Securities Act of 1933". The S-1 contains the basic business and financial information on an issuer with respect to a specific...
with the U.S. Securities and Exchange Commission (SEC), having officially publicly announced the intention of becoming a public company
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
. Citi would claim all profit from the primary offering
Primary shares
In an equity offering, primary shares, in contrast to secondary shares, refer to newly issued shares of common stock that are sold to investors...
, 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
Prospectus (finance)
In finance, a prospectus is a document that describes a financial security for potential buyers. A prospectus commonly provides investors with material information about mutual funds, stocks, bonds and other investments, such as a description of the company's business, financial statements,...
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
Warburg Pincus
Warburg Pincus, LLC is an American private equity firm with offices in the United States, Europe, Brazil and Asia. It has been a private equity investor since 1966...
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
Warrant (finance)
In finance, a warrant is a security that entitles the holder to buy the underlying stock of the issuing company at a fixed exercise price until the expiry date....
to purchase an additional 4.3 million shares from Citi. It is expected Citi will have a stake between 32 percent and 46 percent and will divest its interest in Primerica "as soon as possible" to fulfill its original goal of raising cash by shedding assets to improve financial performance.
Technology
In 2005 Primerica representatives were able to begin using the TurboApps application developed by the Primerica Field Technology team via Palm handheld devices, allowing the insurance quotes to be obtained instantly and applications filled out electronically, effectively speeding up the underwriting process for Primerica Life. In 2007 the electronic application process was extended to include the $.M.A.R.T. loan program.In the summer of 2009, Primerica's IT department started rolling out its line of TurboApps software on the windows mobile
Windows Mobile
Windows Mobile is a mobile operating system developed by Microsoft that was used in smartphones and Pocket PCs, but by 2011 was rarely supplied on new phones. The last version is "Windows Mobile 6.5.5"; it is superseded by Windows Phone, which does not run Windows Mobile software.Windows Mobile is...
platform. With this change, wireless submission of applications is now possible.
Reception
Primerica's life insurance underwriter Primerica Life Insurance Company and its New York subsidiary National Benefit Life are rated A+ as "Superior" with an outlook of stable by A. M. Best as of June 2011. Standard & Poor'sStandard & Poor's
Standard & Poor's is a United States-based financial services company. It is a division of The McGraw-Hill Companies that publishes financial research and analysis on stocks and bonds. It is well known for its stock-market indices, the US-based S&P 500, the Australian S&P/ASX 200, the Canadian...
has the company rated AA as "Very Strong." The Insurance Marketplace Standards Association, a non-profit organization based out of Bethesda, Maryland
Bethesda, Maryland
Bethesda is a census designated place in southern Montgomery County, Maryland, United States, just northwest of Washington, D.C. It takes its name from a local church, the Bethesda Meeting House , which in turn took its name from Jerusalem's Pool of Bethesda...
with the intent to create ethical standards for the insurance industry, has renewed qualification for Primerica Life and National Benefit Life for high standards and quality business, "continuing dedication to ethical business practices."
In 2010, Primerica received a Dalbar Service Award from Dalbar, Inc., a client service rating organization, for Primerica's customer service in mutual funds.
In 2009 the Better Business Bureau changed their rating system from “satisfactory/unsatisfactory” to an letter-based rating. Primerica received an A+ rating from the BBB, and is also a BBB Accredited Business since January 1, 1980.
Compensation
In 2010, Primerica has paid a total of $503,115,928 in compensation to their agents. These licensed Primerica agents, who are licensed in life insurance, each earned an average of $5,296 in compensation during 2010. The income level that an agent achieves varies based upon the licenses obtained, contract level at which the agent receives commissions and the amount of personal production and commission-based businesses written in the field as well as the size and activity of an agent's organization. This is also dependent on whether the agent is an RVP and is also licensed in securities, debt, and other financial parts of the company. Actual gross cash flow is, among other factors, dependent upon the size and scale of a representative’s organization, the number of sales and the override spread on each sale, and the ability of each of their agents.Sources
- Primerica Financial Services Citigroup.com, viewed April 11, 2009
- New Georgia Encyclopedia NGE, viewed November 7, 2006