By Maria Saporta
Friday, July 9, 2010
Never has Primerica Inc.’s slogan — Freedom Lives Here — been more true for the Duluth, Ga.-based company that sells term life insurance and other financial services through its sales force of 100,000 people.
On April 1, Primerica struck out on its own in what has been called the most successful initial public offering in 2010. And on that day, Primerica became free of its former owner, Citigroup Inc.
Also on that day, Primerica reclaimed Atlanta as its home base.
“We are going from being a division of a very large Wall Street company to being our own public company,” said John Addison, the company’s co-CEO who also is chairman of Primerica Distribution. “We are now our own company headquartered in Duluth in metro Atlanta. We are a ‘main street’ company; we are not from Wall Street.”
Addison and his co-CEO, Rick Williams, sat down with Atlanta Business Chronicle for their first extensive interview since going public. It was their way of reintroducing themselves to the local community.
“We have always been based in Atlanta, but we haven’t been perceived as being part of the Atlanta community,” Williams said. “One of our specific goals is to entrench ourselves into the Atlanta community.”
Primerica, which employs 1,700 of its 2,000 employees in metro Atlanta, will demonstrate its loyalties in several ways.
It recently announced that it will hold its 2011 convention at the Georgia World Congress Center. The June convention will attract about 50,000 attendees, including its sales associates and investors, and it is estimated that it will have an economic impact of $58 million. The company had to cancel its 2009 convention in Atlanta because of Citigroup’s financial problems.
Primerica also is in the process of establishing a foundation, and Williams said the company and its employees plan to increase their involvement with local nonprofits.
But Addison and Williams hope their greatest contribution will be in rapidly growing the company into being one of the strongest in the state.
For the past three years, the co-CEOs acknowledge that their focus has been on regaining the company’s independence.
A few years ago, Addison said it was clear that Citigroup was heading in a different strategic direction than operating a term life insurance company.
“Long range we saw that our business wasn’t a perfect fit with Citi,” Addison said. “We believed the best model for our business was as a stand-alone business. Citi worked closely with us and was incredibly helpful throughout all of this.”
But Addison said their negotiations were occurring at the same time as the nation was going through a financial tailspin, which led to several aborted deals where Primerica would have become independent. “We walked through the belly of the credit crisis,” Addison said. “There were countless times when we thought we were close to a transaction, and it didn’t work out.”
Finally, last November, Primerica filed the paperwork for the IPO that took place on April 1.
“The IPO created quite a buzz among the people in New York,” Addison said. “This was not two guys trying to make a quick score and hit the door. The 1,700 people who work here are my friends. We have a strong culture of loyalty in our company. There’s an emotional ownership of the enterprise and the business.”
Williams said the road show was “very gratifying” because Primerica had a good story to tell (unlike so many other financial companies) — stable management, a solid business strategy and a great potential for growth. Primerica has one the nation’s most unusual corporate governance models, but Addison and Williams have worked together for 20 years, serving as co-CEOs since 1999.
“We are so different relative to our skill sets,” said Williams, whose strengths are in the administrative and financial areas while Addison’s strengths are marketing and sales. “But on all the critical viewpoints, we have the same vision and we share a spirit of responsibility. We also try to engender that in our management team — everybody has a role, but everybody has responsibility for the entire company.”
Primerica’s business offerings and target markets also made it stand out.
“Our focus is on middle-income families when most financial institutions have gone upscale,” Williams said, saying that its products appeal to families earning between $30,000 and $100,000 a year. “That’s about half of the U.S. population.”
Investors also have viewed Primerica as having strong growth potential. Both UBS and SunTrust Robinson Humphrey estimated that the company’s earnings should grow at about 17 percent a year over the next couple of years.
Under the agreement with Citigroup, the New York-based company was able to keep almost all of the life insurance policies that Primerica had sold over the past three decades. That meant the transaction was not “cash depletive” for Citigroup.
“We basically left Citi with a large part of the business we had built over 30 years,” Williams said. “But all new sales is 100 percent ours, and that’s the potential for growth.”
Primerica was founded in 1977 by former high school coach Arthur Williams Jr. (who is not related to Rick Williams), who recruited a sales force of part-time representatives who could sell life insurance policies to friends and co-workers. The company then underwent several ownership changes until becoming part of the Citigroup umbrella.
“We have refounded our company,” Addison said. “This is the beginning. It gives a 33-year-old business a smaller base to start from but with a large infrastructure. Our focus is on the transformation of our company — building our sales force and growing our distribution system.”
To that Williams chimed in.
“The middle-income market segment has been ignored,” he said. “There’s a tremendous need for face-to-face personal financial contact. We need to grow our sales force to meet that need.”
Those messages resonated during the IPO on April 1. Originally, the IPO was planned at 18 million shares, but because of the large demand, 24.6 million shares were sold. The IPO had been priced at $15 a share, but by the time it opened on the New York Stock Exchange, it was $19.15 a share.
“It was one of the most exciting moments of my life when we were on the exchange floor pricing the stock for its initial open on April 1,” Williams said. “There was great excitement in the room, and everyone was rooting for us to succeed. It was very gratifying.”
Although Primerica is now an independent company, it continues to have a close relationship with Citigroup, which still owns 39 percent of the business and one seat on the board. Warburg Pincus & Co. owns 22 percent of Primerica and has two seats on the board. Both Williams and Addison also serve on the board.
The other two directors also have strong Georgia ties: George Benson, president of the College of Charleston who used to be dean of The University of Georgia’s Terry College of Business; and Robert McCullough, now a private investor who previously served as a senior partner of Atlanta-based Invesco Ltd. and chief financial officer of its predecessor, Amvescap.
For Addison, the operative word for Primerica is freedom.
“One of our legacies is that at a very tough time and against a lot of odds, we were able to become our own independent company,” Addison said. “We now have the freedom to run our company and be completely focused on our business and the stakeholders of Primerica.”