Travelers May Be Heavy Baggage

When MetLife Inc. (MET ) announced in January that it would buy the last vestiges of the insurance giant Travelers Inc. from Citigroup (C ) for $11.5 billion, the agreement was instantly hailed on Wall Street as a brilliant back-to-basics move for both companies. MetLife would expand its presence as a global insurance giant in new markets and become the largest seller of U.S. life insurance overnight. Citi would finally ditch the idea of being a one-stop shop for all products and focus on its higher-margin banking business.

There's little doubt that Citi made out on the deal. At first glance, the transaction, set to close on July 1, looks like a smart move for MetLife as well. The Travelers unit will broaden the company's life insurance distribution network through new partnerships with Citi's Smith Barney (C ) brokerage and Citibank branches in the U.S., Europe, Asia, and Latin America. And Travelers will help MetLife sell more retirement products and services to aging baby boomers in the U.S. So certain is MetLife of success that on May 3 it upped its earnings forecast for this year and 2006, citing its purchase of Travelers Life & Annuity as a main source of strength.