MetLife Nearing $11.5 Billion Funding Goal to Acquire Travelers Life

June 23, 2005

MetLife Inc. is well on its way to funding its $11.5 billion acquisition of Citigroup Inc.’s Travelers Life & Annuity.

The New York City-based insurance company, which expects to raise $7.6 billion in debt and hybrid securities, already had $5.9 billion in proceeds in its pockets by close of business June 20.

The prospect of such a large fund-raising had some credit analysts nervous, but those worries are easing as MetLife successfully taps numerous markets.

On June 20, MetLife sold $1 billion of 10-year global notes and $1 billion of 30-year global bonds via lead managers Goldman Sachs and Banc of America Securities.

A week earlier, it raised $1.5 billion in fixed-rate perpetual preferred securities, on top of $600 million in floating-rate perpetual preferreds sold in early June. The insurer also sold $1.8 billion in mandatory convertible notes last week.

Bill Wheeler, chief financial officer at MetLife, said the company plans an additional $1 billion in commercial paper and around $700 million in debt denominated in sterling to complete the financing.

“So far so good,” said Kevin Ahern, analyst with Standard & Poor’s in New York, referring to the company’s $5.9 billion in fund raising.

S&P placed both MetLife’s double-A financial strength rating and its single-A holding company rating under review for a possible downgrade when the insurer announced plans to purchase Travelers in January.

Among the risks S&P flagged was the execution risk MetLife faced in raising so much money in such a short period of time, said Ahern.

But assuming all the financing is completed as expected, and there are no other material changes between now and the deal’s closing date sometime in the third quarter, S&P expects to affirm the ratings, Ahern said. The outlook would be negative, however,reflecting longer-term integration and operating risk, he added.

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