In a much expected move, the Wall Street Journal reported that Citgroup Inc. (C) released plans to spin off its Primerica Inc. Life-insurance and mutual fund sales unit. The move, which will undoubtedly be cheered by regulators, signals a further dismantling of the once sprawling company.

The move was not unexpected. Earlier this year, Citigroup created Citi Holdings as a separate entity for Primerica and other unwanted assets and businesses. At that time, Citigroup found it difficult to find buyers among financial institutions and private equity investors.  

Michael Corbat, the CEO of Citi Holdings, said Primerica’s planned IPO “represents an important step in simplifying our organization and demonstrates our continued success in finding solutions for Citi Holdings.”

The move will further strengthen Citigroup’s capital buffers and also signal to anxious regulators and investors that Chief Executive Vikram Pandit is making progress at whittling down the sprawling company. Citigroup said it will continue to collect some earnings from Primerica going forward.

The details of the proposed sale highlights the work that remains in the restructuring of what has become a complex financial services company. With $12.1 billion in assets as of June 30, Primerica represents less than 2% of the $617 billion in Citi Holdings assets as of September 30.

That being said, the spinoff, despite its modest size, holds important symbolic significance. Primerica was a cornerstone of the “new” financial services model pioneered, in part, by former Citigroup chairman and CEO Sanford Weill.

Following on the heels of the Smith Barney retail brokerage sale earlier this year, the sale of Primerica would close the chapter on what looked like a business model that never took shape.

In 1998, Mr. Weill merged Primerica among other entitites with Citicorp to spawn today’s Citigroup. But Primerica was never integrated into the rest of Citigroup and became a textbook example of the difficulties that can arise when merging corporate cultures.

Primerica’s pursuit of lower-end customers didn’t mesh with Mr. Pandit’s vision for a slimmed-down Citigroup that caters to giant institutions and affluent individuals. Furthermore, Primerica’s army of insurance and mutual-fund salespeople maintained a fierce independence from Citigroup. And, as the parent company’s financial problems mounted, some Primerica employees clamored to sever their ties with Citigroup.

Headquartered in Duluth, Ga., but with roughly 100,000 sales representatives scattered across the U.S., Primerica sold insurance, mutual funds and other financial products to lower-end customers.