MetLife to Acquire Travelers

MetLife Inc. on Monday agreed to buy Citigroup Inc.’s Travelers Life & Annuity and most of its international insurance business for $11.5 billion to become North America’s biggest seller of individual life insurance.

MetLife will pay Citigroup as much as $3 billion in stock and the rest in cash, the New York-based companies said. The pair also struck a 10-year agreement to sell MetLife products through Citigroup units including the Smith Barney brokerage, Citibank branches and the Primerica network of 100,000 financial advisors.

The purchase, MetLife’s biggest ever, is a departure for Chief Executive Robert Benmosche, 60. His previous deals, including the $1.2-billion acquisition of GenAmerican Corp. in 1999 and Aseguradora Hidalgo for $960 million in 2002, targeted troubled businesses or smaller operations abroad.

“This is a bit of new territory for them,” said Stuart Quint, who helps manage $75 billion, including MetLife shares, at Gartmore Global Investments in West Conshohocken, Pa. “Because of the size, it’s no slam- dunk.”

The sale marks Citigroup’s near-withdrawal from Chairman Sanford Weill’s vision of a financial-services group that married insurance underwriting with lending and investment banking. Citigroup, now led by Chief Executive Charles Prince, is keeping its Mexican life-insurance unit.

Travelers Insurance Group’s $70-billion merger with Citicorp in 1998 created the world’s biggest financial services company. The Federal Reserve approved the transaction on condition that the combination would sell its insurance-underwriting operations within five years -- unless Congress repealed rules blocking banks and insurers from owning one another.

President Clinton signed that change into law in 1999. Citigroup is selling the business nevertheless to focus on consumer and corporate banking, said Hilary Hayes, who helps manage $4 billion, including Citigroup shares, at Victory SBSF Capital Management.

“This was one of their lower-return businesses, and most analysts had questioned the long-term strategy for the life and annuity business,” Hayes said.

The combined entity will have more than 53,000 employees including about 49,000 from MetLife and 4,370 from Hartford, Conn.-based Travelers.

Shares of MetLife declined 19 cents to $39.75. Citigroup shares gained 67 cents to $49.05. Both trade on the New York Stock Exchange.