Citigroup To Spin Off Duluth-based Primerica
November 17, 2009 04:18 AM
NEW YORK -- Struggling financial giant Citigroup Inc. announced late Thursday an initial public offering for Primerica Inc., and said it would sell off its Duluth, Ga.-based life insurance subsidiary after it goes public.
Citi said it would divest in Primerica to help simplify its organization and raise needed capital. Citi has been among the hardest hit major banks in the United States, as its credit card, consumer loans and investments businesses have soured.
"Today's announcement represents an important step in simplifying our organization and demonstrates our continued success in finding solutions for Citi Holdings, our non-core businesses," said Michael Corbat, CEO of Citi Holdings, in a news release. "We believe this is the best separation alternative for this franchise."
Citi received $45 billion in government bailout funds, and the banking company is 34 percent owned by Uncle Sam. Citi also received $300 billion in guarantees on some of its souring investments.
Reuters and Bloomberg reported the deal could net the financial services conglomerate $100 million immediately. Analysts have said Primerica could have a starting value of $1.6 billion.
All shares sold will be sold by Citi, and the lumbering financial will receive all proceeds from the IPO, the company said in a news release.
Citi will continue to realize substantial revenues from its Primerica unit. The company said Primerica will consist of its 100,000 sales representatives and only 10 percent to 20 percent of its existing life insurance policies, Bloomberg reported. Citi will retain 80 percent to 90 percent of the policies through reinsurance agreements with Primerica, but the Duluth-based company will retain rights to originate new policies.
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