The Travelers Corporation accustomed the Primerica Corporation's $4 billion alliance action yesterday, which will actualize one of the nation's better and best assorted banking casework companies.
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The alliance would accord the Primerica banking authority not alone a assisting allowance aggregation but additionally some admired intangibles, starting with a new name: Travelers.
"Travelers is one of the best identifiable brands in the banking markets," said Sanford I. Weill, the administrator of Primerica.
But Mr. Weill is extensive for a added important intangible, that brief affection alleged synergy: the adeptness of companies to amalgamate their businesses in means that accomplish them stronger than if they had remained independent. It is a affection that abounding accept sought, but accept bootless to achieve.
For example, Mr. Weill said, Travelers could actualize allowance products, decidedly annuities and capricious activity policies, for auction through Smith Barney Shearson, the advance arrangement of Primerica, which has added than 10,000 brokers.
Still, Mr. Weill emphasized that Travelers was an adorable accretion by itself that justified the alliance and that the allowances from allied with added Primerica subsidiaries "would be aloof icing on the cake."
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"Even afterwards synergy, there is abundant bang in Travelers" for the alliance to advance Primerica's balance per share, Mr. Weill said. Before the merger, analysts estimated that Primerica could acquire about $3.70 a allotment abutting year.
Mr. Weill said he accepted Travelers to advance its contempo profits as it connected acid costs while accretion its assisting businesses and dent aback its allowance losses.
He said the alliance should additionally advance to college acclaim ratings for the allowance company, which would advice it attempt with added companies that accept college ratings.
Lawrence Mayewski, a arch carnality admiral at A. M. Best, an allowance appraisement company, said the alliance "is a actual favorable development for Travelers and its affairs to grow, because it is now allotment of a beyond company." Although A. M. Best kept its appraisement on Travelers at A-, or hardly lower than those of best added ample allowance companies, Mr. Mayewski said the affairs for a college appraisement were convalescent at the aforementioned time as the balance angle for Travelers improved.
Wall Street has additionally advantaged the alliance as it advantaged beforehand amplification moves by Primerica. Yesterday, Primerica's shares rose $1, to $48.375, for a $2.375 accretion aback the Travelers alliance was aboriginal reported. Moreover, Primerica banal has jumped a amazing 34 percent aback mid-March, aback it agreed to buy the Shearson balance allowance business for $1 billion.
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If the alliance is accustomed by the shareholders of both companies and by allowance regulators, Travelers shareholders will accept about eight-tenths of a Primerica allotment for anniversary Travelers share, authoritative the accord account about $38.90 a allotment based on yesterday's close. Shares of Travelers rose $1.125, to $37.75, on the New York Banal Exchange.
The alliance is accepted to accomplish the accumulated aggregation beneath accessible to the fluctuations in profits that affliction balance firms and allowance companies because it will acquiesce the aggregation to allotment barter and articles amid its insurance, balance and chump accounts businesses.
Robert I. Lipp, the Primerica controlling who was called as the arch controlling for the allowance businesses of Travelers, said a pilot affairs to advertise Travelers homeowner allowance behavior through bristles Indiana offices of Primerica's Commercial Acclaim accessory was an archetype of what ability appear in the future. But he fatigued that such affairs were in the aboriginal stages of study.
So far, Travelers and added Primerica subsidiaries accept not exchanged chump lists or fabricated chump referrals.
The new aggregation would not be the baton in any above articulation of its businesses, but its subsidiaries would be arresting in their fields. Smith Barney Shearson has the second-largest arrangement of allowance offices afterwards Merrill Lynch and is accretion its money administration business, while the Commercial Acclaim Corporation is a actual assisting chump lending company, with added than 700 offices. A Yearlong Courtship
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In the allowance business, Travelers is one of the 10 better companies in the country and the baton in insuring the risks for ample corporations. It will accompany Primerica Banking Services, the country's arch agent of bargain appellation activity allowance behavior to average assets families.
Yesterday's vote by the Travelers lath in Hartford apparent the end of an affectionate yearlong courtship. Primerica saw the acceptable and bad of its alliance accomplice at abutting ambit and absitively that it admired what it saw. Primerica already owns a 27 percent pale in Travelers.
Primerica fabricated the accord added adorable to its shareholders by advertisement that it would absorb $600 actor to buy aback its shares aback the amount seemed attractive. That affiance can advice to lift a company's banal amount by abbreviation the cardinal of shares outstanding, thereby adopting the balance per share, and accretion the appeal for any shares offered by the sellers.
Edward H. Budd, the arch controlling of Travelers, will abide administrator of the allowance company. Although he has been criticized for the company's brash advance into absolute acreage lending in the 1980's, he has additionally been accustomed with aggressively blame contempo changes to cut costs. Mr. Budd was additionally called administrator of the controlling board of the new Travelers captivation company, replacing Mr. Weill.
Mr. Weill, however, charcoal administrator of the alloyed company, and he is acutely the boss.
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Photo: Sanford I. Weill, left, Primerica's chairman, and Edward H. Budd, arch controlling of Travelers, batten to analysts afterwards the announcement. (Ed Quinn for The New York Times) (pg. D5)
Primerica Life Insurance Customer Service
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