MetLife purchasing Travelers from Citi

NEW YORK — The insurance giant MetLife Inc. is buying Travelers Life & Annuity Co. for at least $11.5 billion from Citigroup Inc., the nation's largest financial institution.

The two companies, both based in New York, said in a statement that the deal will make MetLife "the largest individual life insurer in North America, based on sales."

In addition to buying Travelers Life, MetLife also is acquiring almost all of Citi's international insurance business, the companies said.

The deal already has been approved by both companies' boards and is expected to close in the summer, the statement said. It said the price was "subject to closing adjustments."

MetLife shares fell 19 cents to close at $39.75 in Monday trading on the New York Stock Exchange. Citigroup shares rose 67 cents to close at $49.05 on the Big Board.

Citigroup had retained Travelers Life & Annuity in 2002 when it spun off Travelers Property Casualty Corp. in a $5 billion initial public offering. Travelers Property merged with St. Paul Cos. Inc. in 2003 to create The St. Paul Travelers Cos., based in St. Paul, Minn.

Martha Butler, an analyst with Fitch Ratings in Chicago, said that the agency affirmed MetLife's long-term insurer rating because "this gives them more scale, better distribution channels." She added: "They were probably attracted to (Citi's) international business as well."

Marc Steinberg, an analyst with insurance rating agency A.M. Best Co. in Oldwick, N.J., said the acquisition was the latest in a series of steps by MetLife to expand its business.

"They wanted to increase their distribution channels," he said. "They've been looking to evolve their international business, particularly in emerging markets. This acquisition of Travelers positions them for what they have been striving for."

A.M. Best affirmed its financial strength ratings of MetLife, but put its debt rating under review "with negative implications." Standard & Poor's Ratings Services also put MetLife ratings on watch "with negative implications."

The companies' announcement Monday said that Citigroup and MetLife "have entered into 10-year agreements under which MetLife will greatly expand its distribution by making products available through certain Citigroup distribution channels," including Citi branches and its Smith Barney brokerage unit.