Three years after using it as the vehicle for one of the biggest bank acquisitions in history,
Chairman Sandy Weill plans to break up his Travelers insurance unit and sell part of it to the public.
Citigroup confirmed Wednesday it plans to sell 20% of Travelers Property Casualty in an initial offering early next year, then spin the remainder off to Citigroup shareholders. In addition to Travelers Property Casualty, Citigroup owns Travelers Life & Annuity.
The transaction is contingent on receipt of an IRS determination that such a spinoff would be tax-free. The tax implications of an outright sale are believed to have been what prevented Weill from simply auctioning the unit off to another company.
While a leader in its field and a generator of some $10 billion of annual premiums, the property-casualty unit has been blamed for Citigroup's relatively depressed stock-market valuation. Weill used Travelers to buy Citigroup for $70 billion in 1998, creating the country's No. 1 financial services firm.
In a press release, Citigroup said it expects to collect a $1 billion dividend from Travelers Property Casualty prior to the spinoff. Robert I. Lipp, a Citigroup director, was named chief executive of Travelers Property Casualty, a position he held before.