More on Citi's move to take Primerica public

November 8, 2009 | By Jim Kim

We all know that Citi (C) is under a lot of pressure to sell assets, as is Bank of America (BAC). So some might have greeted the news that Citi is planning an initial public offering for its Primerica unit as good news. But Barron's adds some interesting color to the development. Clearly, the bank had no luck finding a buyer. "In short, the public option proved to be essentially the only option Citi had."

As for the deal itself, it's not like Citi is jettisoning all links to the insurance unit. To price the deal it had to structure it a certain way. The result is that Citi will retain as much as 90 percent of the economic interest in the existing insurance policies. The going-public entity will thus be "a future-sales revenue stream" company. Was that the only way to get a deal. We'll see how Citi fares on this. It will likely raise up to $100 million, though the results will depend on market conditions. It's doubtful that this will meaningfully improve its capital ratios.

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