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. Last Updated: 07/27/2016

MetLife Pays $11.5Bln for Citigroup Insurer

NEW YORK -- MetLife on Monday agreed to acquire Travelers Life & Annuity from Citigroup for $11.5 billion, bolstering its product reach while sounding Citigroup's retreat from the one-stop financial supermarket concept.

The transaction will make MetLife's already dominant position in the U.S. individual life insurance market even larger and make it No. 2 in the annuities market -- behind Hartford Life Insurance.

For Citigroup, it is another step back from the concept of one-stop financial shopping -- combining insurance, brokerage and banking under one roof -- which it pioneered in the 1990s.

Insurance turned out to be less profitable and slower-growing than other financial businesses. Citigroup is now concentrating on retail and investment banking.

As part of the deal, MetLife will market its financial products through Citigroup for the next 10 years, including through Smith Barney retail brokerages and Citibank branches.

Citigroup will receive $1 billion to $3 billion of the purchase price in MetLife stock and the remainder in cash, giving it an after-tax gain of about $2 billion subject to adjustments at closing.

"This deal employs some of MetLife's excess capital in a potentially higher-return business and gives it more distribution," said Stuart Quint, analyst with Gartmore Global Investments in West Conshohocken, Pennsylvania, which manages $80 billion, including financial stocks like MetLife.

The businesses being acquired by MetLife generated revenue of $5.2 billion and net income of $901 million in 2004, with total net assets of $96 billion.

Robert Benmosche, MetLife chairman and chief executive, said the deal "allows us to enhance our products we have in place today, and our volume and size."

"What a great opportunity for the brand of MetLife to be distributed through Citigroup," he said on a conference call.

MetLife said it plans to issue debt and convertible securities to finance the deal, and may sell assets, including real estate and its 52 percent stake in Reinsurance Group of America, a major reinsurance provider.

But Bill Wheeler, MetLife chief financial officer, said on a conference call that "we can do the deal without selling anything."

MetLife said it would end a stock-buyback program and use the cash for the acquisition.

The transaction is expected to close this summer.