Citigroup’s decision to sell its Travelers Life & Annuity arm to MetLife for an estimated $11.5 billion could be a sign of things to come in the financial advisory business.
With the large brokerage firms embracing “open” product environments and removing pressure on reps to push in-house products, much of the firms’ incentive for maintaining captive insurance units has dissolved. As such, “You might see a growing number of centralized insurance groups like this,” says Chip Roame of Tiburon Strategic Advisors.
Still, it’s clear that another trend—the drive to provide advisory clients with a full range of financial products and services—will ensure that advisors will continue to need access to insurance products and services. Indeed, as part of the acquisition, MetLife signed a 10-year deal with Citi that provides for the firm’s insurance products to be sold through Smith Barney and other Citi distribution channels.
“It may be too overwhelming to expect reps to understand the intricacies of these products and sell them appropriately,” Roame says, but reps might find it easier to do when partnering with insurance experts, such as MetLife. The deal turns MetLife into the largest life insurance company in the U.S., increasing its assets by nearly 60 percent.
“Travelers Life & Annuity has a long and successful history of providing world-class products and services to its global customer base,” said Citigroup CEO Charles Prince in a statement. “We will redeploy the sale proceeds to higher return and higher growth opportunities and to maximize returns to our shareholders.”