Top advisors with PFSL Investments Canada Ltd., also known as Primerica, should get the chance to own part of their firm when Citigroup Inc., the owner of PFSL, sells off PFSL some time in the New Year.

According to the preliminary prospectus filed with the U.S. Securities and Exchange Commission by Citigroup: “Be-coming a publicly traded company will allow us to use equity awards to align the interests of our employees and sales representatives with the performance of our company.”

That compensation package is a focus of the prospectus. But New York-based Citigroup, which owns PFSL outright, does not say what percentage of the new Primerica Inc. it intends to sell to directors, employees or the public.

The prospectus, filed on Nov. 5, is for an initial public offering to be launched some time in 2010. The document details Primerica’s growth strategy, risks to the company and the structure of a deal that allows Citigroup to keep the cash from a large portion of Primerica’s in-force business. The document also discusses financial data and sales performance, demonstrating how significant the Canadian portion of the business is to the new company.

On the matter of compensation, Primerica will award equity shares to some employees and top salespeople and offer share-buying programs to regional vice presidents and employees. Some former Citigroup equity awards will be converted into Primerica awards, along with the creation of new compensation programs, says the prospectus.

“These incentives will give us new ways to motivate our sales force,” says the prospectus.

Jeff Dumanski, president and chief marketing officer of the Mississauga, Ont.-based Canadian operations of PFSL, would only say, “We’re excited.” He referred all questions to press releases from Primerica in the U.S. and the parent, Citigroup, which hopes to raise as much as US$100 million with the IPO. (PFSL is now in a quiet period before the IPO to prevent any perception that it is trumpeting itself ahead of the IPO.)

In the prospectus, Primerica describes the particulars of its famous distribution model, claiming a sales force of more than 100,000 in North America, 25,000 of whom are licensed to sell mutual funds.

That number of salespeople exceeds the size of any dealer in North America many times over. But, as the filing also explains: “Virtually all of our sales representatives begin selling our products on a part-time basis, which enables them to hold jobs while exploring an opportunity with us.

“When a sale is made, the selling representative receives a commission, as does the representative who recruited him or her, which we refer to as ‘override compensation’.”

The prospectus details an employee structure that includes 4,000 regional vice presidents who support and monitor the progress of all the part-timers and “on whose sales they earn override commissions.”

Primerica says it reached 235,000 recruits in 2008, the balance of whom aren’t licensed yet. Primerica’s growth strategy, stated plainly, is to grow its sales force, including recruits, licensed reps and regional vice presidents.

The regional vice presidents, the prospectus says, will soon receive new technology to reduce time spent on administration so they can devote more time to recruiting.

“These improvements, coupled with our new equity award program, will encourage more of our sales representatives to make the commitment to become RVPs,” says the prospectus.

As IPO documents typically go to considerable lengths to disclose risks, Primerica describes its model as still being open to scrutiny in various legal jurisdiction and refers to “various laws and regulations that prohibit fraudulent or deceptive schemes known as money pyramids.”

Primerica believes itself to be “in compliance with law and regulations” but the prospectus notes that government bodies or courts could still disagree at some point.

The prospectus also notes that the potential for higher regulatory standards in the U.S. could materially affect the business. It explains that PFS Investment in the U.S. is regulated as a broker/dealer and that the new Investor Protection Act of 2009 proposed by the federal Treasury Board would impose “fiduciary duties” on the firm.

Says the prospectus: “If the IPA is enacted, it could result in increased litigation, regulatory risks, sanctions, changes to our business model or a reduction of the products we offer to our clients, which could have a material adverse effect on our business, financial condition and results of operations.”

@page_break@Sales of term life insurance— one of Primerica’s staple products — have been stable throughout the financial turmoil since the beginning of 2008, the prospectus says. Primerica sold more than 115,000 policies in the six months ended June 30, 2009, compared with more than 121,000 in the first six months of 2008. The prospectus indicates a slight decline in the average size of new policies, along with slightly higher lapse rates — the rate at which people cancel their policies.

Sales of new investment and savings products were US$1.5 billion for the six-month period in 2009, compared with US$2.6 billion for the first six months of 2008, on a comparative basis. Primerica blames the lower results on economic hardship experienced by the middle-income families, its explicit target market.

The prospectus also says commissions and fee revenue were down as a result of the lower value of assets in client accounts, composed mostly of U.S. and Canadian securities. The average value of assets in client accounts was US$24.2 billion for the six months ended June 30, 2009, vs with US$35.4 billion for the comparable period in 2008 — a decline of almost 32%.

Primerica’s Canadian operations and the regulatory requirement here are also plainly described in the prospectus. Overall pretax earnings were boosted by 17% by the Canadian operations in the year ended Dec. 31, 2008, and by 12% the year before.

Canadian in-force insurance business represents one-quarter, or US$2 billion of the US$8 billion total for the business for Primerica, says Darian Hala, an analyst with A.M. Best Co., the New Jersey-based rating agency. A.M. Best, which expects Citigroup to divest itself entirely of Primerica eventually, has placed Citigroup’s rating under review until after the IPO, when A.M. Best will better understand how its capital structure will settle.

Hala explains that although Citigroup is selling Primerica, the parent has structured the sale to keep some of the income generated from Primerica’s in-force insurance business. Citigroup is reinsuring a big block of Primerica’s insurance business with several of Citigroup’s own reinsurance arms, which in turn will send the cash back to the parent group in the form of a dividend.

“Primerica will still administer the policies, but it will not receive all of the income that the policies throw off,” Hala says. “And that’s one of the reasons we have the ratings under review — because its financial profile is changing.”

Under the current business structure, PFSL Canada sits under the U.S. business, Primerica Life. After the IPO, Hala says, the Canadian operation will be a sister company within the holding company, Primerica Inc. IE