Just one day after Connecticut officials approved the deal, MetLife announced it has completed the acquisition of Citigroup’s Travelers Life & Annuity and substantially all of Citigroup’s international insurance businesses for $11.8 billion.
Under the terms of the agreement, Citigroup received approximately $1 billion in MetLife common stock and $10.8 billion in cash, subject to post-closing adjustment. The sale will result in a third quarter gain of approximately $2 billion after tax for Citigroup.
“This transaction significantly increases our size and scale in our core insurance and annuity products and expands our presence in the retirement and savings and international markets,” said Robert H. Benmosche, chairman and chief executive officer of MetLife.
“The distribution agreements with Citigroup, complementing our existing channels, provide us with one of the broadest distribution networks in the industry. Altogether, the transaction solidifies our leadership position in the industry and provides a platform for growth beginning with modest earnings accretion in the second half of 2005.”
“In the past few months leading up to the closing, we have made major strides and look forward to integrating the Travelers operations swiftly and smoothly into MetLife,” said C. Robert Henrikson, president and chief operating officer of MetLife. “Operationally and in terms of our business focus, this is a great fit. We look forward to maximizing the opportunity.”
As part of the transaction, MetLife products will be available through certain Citigroup distribution channels, including Smith Barney, Citibank branches, and Primerica in the U.S., as well as a number of international businesses, under ten-year agreements.
MetLife also announced that, in a transaction related to the acquisition of Citigroup insurance businesses, it signed an agreement with Citigroup to acquire CitiStreet Associates, a division of CitiStreet LLC, which is primarily involved in the distribution of 403(b) and 457 annuity products to the healthcare, education and not-for-profit markets. This transaction is expected to close on September 1, 2005. CitiStreet LLC is a joint venture owned equally by affiliates of Citigroup and State Street Corporation. CitiStreet LLC is not being acquired by MetLife.
In approving MetLife’s acquisition of Hartford-based Travelers Life and Annuity, Connecticut Insurance Commissioner Susan Cogswell required the insurer to report to state officials any changes in its business and employment levels.
In her order, Cogswell said MetLife must honor its commitments spelled out in a letter in which it vowed to maintain 1,310 jobs in Hartford for one year after the closing. MetLife also indicated it has no plans to substantially reduce its writings in Connecticut.
The merger had come in for criticism from state Attorney General Richard Blumenthal, Hartford Mayor Eddie Perez and other officials over potential job losses in Hartford. MetLife initially said it would eliminate 600 jobs and relocate an additional 100. Following negotiations with Gov. M. Jodi Rell, it later said the cuts would amount to 390, with another 100 jobs to be relocated.
Attorney General Blumenthal told Associated Press Cogswell’s decision “appears to hold MetLife to past commitments — but no more.”