Primerica IPO: Primerica Hits NYSE

After yesterday’s $320 million IPO, Primerica, Inc.–formerly part of Citi–released about 21 million shares of common stock onto the NYSE. The shares were priced at $15 at opening today, and have since gone up.

Outside of speculating on Primerica’s stock values, why should you be interested in Primerica? Because it’s a multilevel marketing scheme. Business Insider took an in-depth look at what–and who–Primerica actually is:

Primerica employs, according to their prospectus, over 100,000 representatives who go out and sell financial products like term life insurance, mutual funds, life insurance, and annuities. Almost all the products offered by Primerica are from Citigroup, its corporate parent. All the mutual funds and annuities are sold through Primerica’s licensed broker/dealer subsidiary, PFS Investments.

The goal is for the rep to push these products in a “warm market,” which includes your family and friends who you’d be more comfortable selling to. The rep receives a commission for these sales and his recruiter, recruiter’s recruiter and so on all receive a portion of the sale. Reps are encouraged to recruit more people to continue bringing in sales and revenue.

According to Primerica, these 100,000 reps make on average, $5,156 a year. Hardly enough to do anything with let alone live on. Higher ups who run district sales offices are called RVPs or regional vice presidents. They make significantly more money. Know why? Primerica employs an 11-tier upside system in which you get a kickback of commissions from your recruits, your recruit’s recruits, and so on up until the 11th level. (This information can be found on page 112 of the prospectus.)

Local Primerica offices are actually located in peoples’ homes, according to the article. Of Primerica’s $168 million in income last year, an estimated $30 million came from its own reps, who pay enrollment fees and monthly fees.

That’s no reason not to invest. Avon, another MLM, has done quite well during its lifetime as a public company. It is, however, worth knowing what Primerica is.

  • Douglass

    Why do you call Primerica an MLM “scheme”. Primerica IS a marketing company. Representatives sell legitimate products that improve the client’s financial situation. You have presented a superficial uneducated picture of the company. Look at the basic roots of the company. It was originally founded by A.L. Williams who revolutionized the insurance industry with his mantra of buy term insurance and invest the difference. This consumer oriented philosophy is at the core of Primerica’s marketing efforts. All representatives that take the time to learn the corporate values have a chance to become successful and make a good living helping clients improve their financial situation. You should provide both sides of the story and do your job right instead of a biased one sided view to try and slander a company that has helped millions of clients improve their financial situation. Your article sound like a “media marketing scheme” instead of a complete unbiased story presenting all the facts.

  • Jenny

    Haha….my God. It’s so funny how people still have the audacity and just plain IGNORANCE to call Primerica a scheme….first and foremost never working in the business themselves, let alone hard enough or long enough to even make it work (eh hemmm…more than a couple months quitters). And second, even after our company has had the most successful IPO in the last 10 years of a financial services company, we pay out 2.4 million in death claims a DAY, we promote a new $100,000 earner every 2.5 DAYS, and we are the only company out there actually trying to rescue the dying middle class. But uhh….you’re right. It’s a scheme. Don’t believe it…and DEFINITELY don’t join and change your future and create a legacy for you family. It’s not worth it and you probably wouldn’t make it anyway. :)

  • Crystal

    I love how at the end you compare it to Avon – well I have done Avon and trust me it is nowhere near the league of Primerica. I also work for Close to my Heart which is another MLM style company. Both are great companies but neither are the caliber of Primerica or have the same number of people making such high income. Calling something a scheme implies that it’s sole purpose to steal money or mislead people. None of these companies, from Avon to Primerica could be called a scheme. You may sadly deal with people who are unethical in any business – including the very large corporate I work for – but that doesn’t make the opportunity or company unethical.

  • James

    I have been a Primerica client for over 5 years, and my father has been a client since 1979, when they were known as A.L. Williams. I have always felt that they have had a significant positive impact on my family. Recently, I was told that I should be wary of this company, that they are a “scam” and a “pyramid” scheme, and that I should do some research on this company on the internet. I decided to do so, and this is what I found.

    There are some very favorable articles that have been published on this company lately.
    They have been featured on/in
    -The Wall Street Journal.
    -The London Times
    -Fox Business News
    -Jim Cramer’s Mad Money
    -Wikipedia
    -Google Finance, among others.

    Here are some interesting facts I found on the company:

    -Been in business since 1977
    -Regulated by the SEC, FINRA, and the Dept. of Insurance in every state they are in.
    -Maintains a positive rating with the Better Business Bureau
    -Rated A+ by AM’s best, an independent insurance rating company (similar to Consumer Reports)
    -Owned for 20 years by Citi, the largest corporation in the world.
    -Recently went public, April 1, 2010. Traded on the New York Stock Exchange
    -Warburg Pincus, a private investing firm, invested $240 Million into the IPO (Initial Public Offering)
    -Before Warburg Pincus invested, they spent over $9 Million investigating the company
    -The stock is up over 50% in the last 10 months, and has been called the “IPO of the year” by Jim Cramer and others.

    Here are some links you can explore yourself:

    http://online.wsj.com/article/SB10001424052702303960604575157722249937544.html

    http://video.foxbusiness.com/v/4133597/primerica-ipo-soars/

    http://www.google.com/finance?q=NYSE:PRI

    http://www.ripoffreport.com/financial-services/rip-off-report-inves/rip-off-report-investigation-9cp7d.htm

    As a matter of fact, this is the only negative information I could find on this company:

    -Blogs, such as the one here, posted by anonymous people, who do not have to post their credentials, their real name, or anything to show that they are telling the truth, or even know what they are talking about.

    I’m sure there are some people in Primerica who are not on the up and up. They are a large company. However, with all the government agencies, consumer advocacy groups, media, and investors looking so closely at this company for the last 34 years, I’m sure that if they were a scam, pyramid, or into any kind of shady practices, someone would have found out and shut them down by now.

    I’m glad that I had an agent over 5 years ago. The simple financial advise they give
    is going to make a difference of hundreds of thousands of dollars to my family over the next 30 years. When doing research, don’t look to the “gossip”, look to the facts.

    PS: You may see this post on multiple sites, I don’t like to see any of the few good companies out there get bashed undeservingly.

  • silvia

    james, i am glad to hear this about the company. i’m actually looking into writing a paper for my final class in my mba program. currently, i’m submitting an outline and was very unsure if i wanted to do it on this company because so many people bash it and don’t take it serious. i know that the business side is not for everyone just as any other profession; however, most of their products/services are great, if not all. i decided to do it because of what happened to my brother and how he was treated after two years being the client… primerica actually did more than what it normally tells people when it comes to the living benefits on the life insurance.
    my parents were clients when the company was still a.l. williams. when my brother turned 18 and i turned 21, my mom made an agent come by the house and give us our own. we didn’t know better and did as she said… who would have known that close to two years later, my brother would benefit from their living benefits?! they did it without hesitating; without taking their sweet time; without even discussing or arguing about anything!
    so thank you for confirming my thought and going with this company!

  • Funny Posts

    It is a MLM scheme. I find it hysterical people freak about it. This is not a finance company. This is not a bank. It is not prestigious. Bankers will roll their eyes at you if you pretend to be in finance. It is no different then peddling any MLM stuff (i.e. tupperware, vitamins…). You are essentially the new version of the door to door salesman. Your client-base are your family and friends.

    My impression is that the jobs are misrepresented somewhat to recruits. Any job you have to pay for is not worth it IMHO. I know people that have this job as “VP’s”. Most did not go to college and I can’t say I respect their job. I feel they take advantage of people they know that are misinformed about investing. Then again, based on the caliber of people I am privy to they probably do not realize they are charging high fees.

    MLM is not illegal. Though I cannot say it isn’t a bit trashy. I know the primerica people will probably freakout and call me a lair, but google ‘primerica scam’ and look for yourself.