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Primerica IPO a Success as Shares Jump

Primerica priced its initial public offering and opened strong Thursday, with 21.36 million shares at $15.00 — 3.36 million shares more than anticipated and $1 above the $12-$14 price talk.

Rick Williams and John Addison, co-chief executives of the direct-marketed financial services firm, offered their thoughts to CNBC.

"No one else has our business model," said Williams, describing the company's "friends and family" sales strategy. "No one else focuses on the middle-income, middle market like we do."

Shares of Primerica closed up a whopping 31 percent Thursday at $19.65.

Primerica, spun off from Citigroup — sole bookrunner on the offering — sells insurance, annuities and funds. How are sales in this troubled economic environment? According to Addison, "very good" — thanks to the solutions Primerica offers for those troubles.

"We're helping middle-income families solve their financial problems," said Addison. "And that's a great business to be in."

He also praised the tenacity of the firm's "thousands" of employees, contrasting salespeoples' esprit with the wavering enthusiasm of people "joining a health club."

With a chance to make money and help others at the same time, Addison declared, "We build great loyalty."

After the IPO, ownership is divided among the public, Citigroup (with 43 percent) and private equity group Warburg Pincus.

What Citigroup Gets

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.

The bank 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.

In the lead-up to the IPO, analysts said Primerica would not be able to invest the proceeds in its growth and instead would rely on its sales force to increase its business.

If Citigroup and the other underwriters purchase their full overallotment of 3.2 million shares, Citi's stake in Primerica will be reduced to 39 percent.

The IPO and private deal with Warburg should reduce Citi's GAAP assets by about $5 billion during the second quarter, the bank said in a statement.

  • Bob Pisani interviews the co-CEOs — Watch the video.

-- Reuters contributed to this article.

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CNBC Data Pages:

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Citi's Peers — How Other Financials Fare:

Bank of America

JPMorgan Chase

Morgan Stanley

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Disclosures:

Disclosure information was not available for Addison, Williams or their company.

Disclaimer