New #1 in life insurance
This has been an amazing week for deals. First, the $54 billion Procter & Gamble/Gillette deal. Next, the $16 billion SBC/AT&T deal.
Now US insurer MetLife has announced it will buy Citigroup's Travelers life insurance and annuity business for over $11.5 billion. The combination would make up the #1 life insurer in the US, and give MetLife significant insurance presence in UK, Belgium, Australia, Brazil, Argentina and Poland. Even so, the new MetLife will hardly be the dominant player, but all signs are that further consolidation in the industry will take place.
According to a Wall Street Journal article "MetLife Deal Creates No. 1 Seller of Life Insurance in the U.S.", 2/1/2005) notes that consolidation, while coming, is coming slowly:
The deal is the latest effort by a life insurer to ramp up the scale of its operations, in what many industry executives see as coming industry consolidation. In a sign of the large number of insurers competing for business, MetLife said its share of the market as the new No. 1 seller of life insurance to individuals will total just 7.6%. MetLife now is the eighth-biggest seller. Its new status as the third-biggest seller of individual annuities gives it a 7.6% share of that market.
Meanwhile, Citigroup has been gradually getting rid of its insurance business it acquired in 1998 when it absorbed Travelers Insurance. The thought then was that there was a true synergy between banking and insurance. That thinking has changed. In 2001 Citigroup split off its Travelers Property and Casualty Insurance business, later bought by St. Paul. It's another case of two companies straightening out their hands by discards and pick-ups.
