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Primerica Starts Strong for Citigroup

The stock has slumped since that announcement, losing 6% through Wednesday's close at $4.05. The Treasury's cost basis for its stake is $3.25 per share, so it was sitting on a paper profit of around $6.2 billion for its 7.7 billion shares when the yesterday's closing bell sounded. Citigroup shares were up 1.5% to $4.12 in recent trades.

Primerica sells term life insurance, variable annuities and various mutual fund products to middle-income consumers. It relies heavily on leads generated by new sales recruits, and says it has more than 100,000 licensed representatives. The model prompted skepticism from Morningstar analyst Jim Ryan, who recommended avoiding the IPO.

"[E]ven though the company has recruited north of 200,000 bodies over the each of the past five years, the number of licensed insurance and mutual fund representatives has remained flat at about 125,000 per year, indicating an extremely high fallout rate," Ryan says in commentary on Morningstar's Web site. "The average sales representative sells only two and a half new policies per year, a paltry amount by any measure, and we think marketing through independent representatives cedes all control of the customer to salespeople who can easily switch to another company."

Investors appear to choosing for today at least to look past this criticism, as well as some regulatory concerns raised by the company in its official filings, to concentrate on its earnings.

According to its S-1, Primerica posted net income of $494.6 million on revenue of $2.22 billion in 2009, up from a profit of $167.7 million on slightly lower revenue in 2008. The higher profit resulted from the absence of charges recording in 2008 related to goodwill impairment of certain assets that declined in value due to the financial crisis.

-- Written by Michael Baron in New York.
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