According to Reuters, Travelers Property Casualty Corp., the car, home and business insurance unit of Citigroup Inc. has filed details of its initial public offering, thought to be the largest ever in the U.S. insurance sector.
The Connecticut-based insurer is being spun off by Citigroup to its shareholders, with 20 percent to be sold to the public. The IPO could accumulate as much as $5 billion, according to analysts, making it the largest U.S. insurance IPO by far. Citgiroup made note of the spinoff back in December, which is set to be finalized by the end of March.
Travelers indicated it would sell its CitiInsurance International Holdings Inc. unit to Citigroup for around $418 million, and pay a $1 billion dividend to Citigroup before the IPO. As a wholly owned unit, Travelers regularly made dividend payments to Citigroup from its earnings.
Travelers is also receiving some added protection from the increasing costs of asbestos insurance payouts.
As part of the arrangement of the spinoff, if Travelers tallies more than $150 million in unexpected, additional asbestos-related charges in any one fiscal year, after reinsurance, Citigroup will cover the amount, up to a limit of $800 million per year, after tax.
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