MetLife to Acquire Travelers Life & Annuity from Citigroup - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Welcome to the teleconference to discuss MetLife acquisition of Travelers Life & Annuity, featuring CitiGroup CEO Chuck Prince and CFO Sallie Krawcheck. Today's call will be hosted by Art Tilsley, Director of Investor Relations. We ask that you hold all questions until the completion of the formal remarks at which time you will be given instructions for the question and answer session. Please note this conference is being recorded. Mr. Tilsley, you may begin.

ART TILSLEY, DIRECTOR, IR, CITIGROUP INC.: Thank you very much operator, and thank you all for joining us this morning to talk about our announcement, to sell our life insurance and annuity businesses to MetLife. We have a brief presentation we are going to walk you through. It's available through the webcast, as well as on our website. And Sallie will walk you through that presentation. Before we do, however, Chuck will open it up with some comments and then, of course at the end we'll be happy to take your questions. With that, let me turn it over to Chuck.

CHUCK PRINCE, CEO, CITIGROUP INC.: Art, thank you. And thanks everybody for joining us. Sallie and I and the whole team are here and we're delighted to this time with you on a very, very positive subject. We're very excited about our announcement this morning. It's a win/win for both companies selling our Travelers Life & Annuity to MetLife. For us, for CitiGroup this transaction really reflects our ongoing focus on disciplined capital allocation. You heard us talk about that for sometime now. You have seen some other steps in that regard. We have been very proactively, I would say, reallocating our capital to higher growth and higher return opportunities, trying to increase the return for our shareholders. And with this transaction, we'll continue to redeploy our capital to these higher opportunities, to simplify the company, and to maximize our return. We have great opportunities for use of the proceeds, both organic, although I do want to emphasize our commitment to positive operating leverage that we've restated a little bit ago, and also on the acquisition front, although I do want also want to emphasize here our demonstrated commitment to pricing discipline that we've shown for sometime. So none of this is going to go crazy in any particular direction.

Travelers for its part will become really one of the world's leading insurance companies. The insurance industry is consolidating, especially here in the states and Travelers is a great company. But for us, for CitiGroup to be a consolidator in the insurance business is really not a part of our strategic focus. Travelers has done very well, thanks to George Kokulis and the team and will continue to do well, as part now of a very large industry leading insurance company. We look forward to working with MetLife in our distribution agreement to make their products available. I think Bob Benmochet and his team represent a great management group and we really look forward to having their products in our distribution channels, subject always to appropriate suitability standards. Overall, we're very excited by the opportunities this creates for us and I emphasize the word "opportunities" because as we redeploy the proceeds we really think we can whip the overall returns of the company for our stockholders. So now, Sallie, if I can, let me turn it over to you and ask you to take everyone through the deck.

SALLIE KRAWCHECK, CFO, CITIGROUP INC.: Thank you, good morning everyone out there. Thank you all for joining us on such short notice this morning. I have a short deck which I am going to spend a few minutes going through, I am not going to not put you through deck purgatory. It is quite short to go through some of the highlights of the transaction, and after that we would be happy to take questions. If you go to page two of the deck we have a transaction summary. Let me start here. The transaction we're announcing is the sale of substantially all of CitiGroup's insurance businesses to MetLife. So this includes the U.S. and international businesses, the ones that you see being reported in the statistical supplement, and in our reports, as being under life insurance and annuity. It also includes our joint ventures such as those with Mitsui, Simitomo in Japan and Subon in Taiwan. There are some businesses that it excludes. The Mexico life insurance business for us and also insurance businesses that we have bits and pieces outside of the life and annuity reporting lines, such as PFS, for example so that's excluded. The sale price you have seen in the price release is $11.5 billion, which, of course, is subject to some up and down closing adjustments. This represents, as we put here, one to three billion dollars in MetLife equity security, and the balance, we'll put it another way, $8.5 or $10.5 billion in cash. In terms of what it represents in terms of ratios, it's 12.8 times 2004 earnings. Now this is on a net number. And that number of $901 million in 2004 earnings, it is, however, 12.9 times operating income for that measure for insurance of 891. It represents 1.54 billion of unlevered book value and …