In its first public debt issuance since its initial public offering of stock in 2010, insurer Primerica is in the market with a $350 million offering of SEC-registered, 10-year senior notes to fund the repayment of a $300 million note held by Citi, sources said. Any remaining proceeds will be used for working capital and general corporate purposes.
The Citi note is a legacy of a series of transactions undertaken in connection with the company’s IPO in March 2010, which included a corporate reorganization, coinsurance agreements with affiliates of Citi, and the private sale of common stock and warrants to private equity funds managed by Warburg Pincus.
On April 1, 2010, the company privately placed $300 million of 5.5% notes due March 31, 2015, and callable Aug. 13, 2012, at par. The notes currently represent the only outstanding long-term debt on Primerica’s balance sheet, along with $143 million of short-term borrowings as of the end of March, filings show.
Earlier this year, Primerica announced that it would buy back $150 million of its shares from Warburg Pincus backed by dividends from its nonlife and life subsidiaries, leaving the private equity manager with a roughly 18% direct stake in Primerica, or 23% including warrants.
The Duluth, Ga.-based company distributes financial products to middle-income households in the U.S. and Canada through its term-life, investment and savings products, and corporate and other distributed-products segments.
Bookrunners for the A-/Baa2 offering are Citi, J.P. Morgan, and Morgan Stanley. As an affiliate of Citigroup Capital Markets will receive substantial proceeds from the offering, Citi will not confirm sales to any account over which it exercises discretionary authority without the prior written approval from the accountholder, under the provisions of Rule 5121, filings show.
S&P maintains a stable outlook on the ratings, noting a “very strong competitive position in the U.S. term-life-insurance market with middle-income consumers, and its very strong levels of capitalization and profitability during the next 24 months.” – John Atkins