(Bloomberg) -- Citigroup Inc. is preparing to sell PrimeReinsurance Co., a subsidiary created five years ago to ease thespinoff of life insurer Primerica Inc., according to peoplefamiliar with the process.

The unit, based in Burlington, Vt. and known as Prime Re, coulddraw interest from Reinsurance Group of America Inc., Resolution Reand other firms that specialize in buying blocks of complicatedinsurance contracts, said two of the people, who asked not to benamed because the process isn’t public.

Chief Executive Officer Michael Corbat is selling businessessuch as subprime lender OneMain Financial Inc. and retail banksacross Latin America to sharpen the Citigroup’s strategy. He’swaited to sell assets until values rose, and the market forreinsurers has picked up in recent months as firms expand andinvestors seek returns not tied to financial markets.

“We’re seeing all sorts of consolidations,” Meyer Shields, ananalyst with Keefe, Bruyette & Woods, said by telephone.Customers are choosing to buy reinsurance “from a smaller number ofbigger companies.”

The people didn’t provide a precise value for a sale of PrimeRe. Citigroup and Primerica, which the New York-based bank spun offin a 2010 initial public offering, transferred some outstandingterm-life policies to the reinsurer. Prime Re had $7 billion inassets as of Sept. 30, 2013, a company presentation showed.

Jennifer Lowney, a Citigroup spokeswoman, and Sally Smith of RGAdeclined to comment. A spokesman for Resolution Re couldn’timmediately be reached.

Insurance Deals

Reinsurers assume risks from primary insurers and invest premiumrevenue before claims come due. Hedge funds and alternativeinvestors have rushed into the market, seeking higher yields asinterest rates remain near zero.

About 390 insurance transactions were announced last year for acombined value of almost $50 billion, according to data compiled byBloomberg. That made it the industry’s busiest year for dealmakingsince 2008.

Axis Capital Holdings Ltd. agreed in January to merge withPartnerRe Ltd. to compete with larger rivals. XL Group Plcannounced a deal this year to buy Catlin Group Ltd. for about $4billion.

RenaissanceRe Holdings Ltd. completed its acquisition ofPlatinum Underwriters Holdings Ltd. in March. Endurance SpecialtyHoldings Ltd. agreed to take over Montpelier Re Holdings Ltd. onTuesday after abandoning a more than $3 billion hostile bid foranother reinsurer last year.

--With assistance from Doni Bloomfield in New York.

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