Representatives for MetLife Inc. are trying to convince Connecticut regulators that the company’s proposed $11.5 billion acquisition of Travelers Life & Annuity will be good for residents of Connecticut.[@@]
Representatives for MetLife, New York, went to Hartford Tuesday to appear at a public hearing on the Travelers Life deal that was organized by the Connecticut Insurance Department.
Mark Franklin, a legal counsel for the department, served as the hearing officer and will be responsible for helping Connecticut Insurance Commissioner Susan Cogswell decide whether the proposed deal would reduce competition in the insurance industry, weaken the financial stability of Travelers Life or somehow violate the public interest.
MetLife announced an agreement in January to acquire Travelers Life from the company’s current owner, Citigroup Inc., New York.
MetLife has warned that it may eliminate about 580 of Travelers Life’s 2,000 jobs early on, and it is not guaranteeing that it will employ any of Travelers Life’s current employees after 2006.
At the hearing in Hartford, Hartford Mayor Eddie Perez cited MetLife’s refusal to guarantee more jobs, its refusal to promise to base a senior executive in Hartford and its apparent reluctance to make firm, long-term philanthropic commitments as reasons for Franklin to recommend that Cogswell reject the deal.
Perez pointed out that Travelers has been part of Hartford since 1864, and that other large insurers have given Connecticut far more generous promises about jobs and philanthropy.
“If the insurance commissioner approves this transaction, the bar will be significantly lowered for all future insurance transactions and the public’s legitimate interest in jobs, government revenue and philanthropic giving will be left by the wayside,” Perez testified.
But MetLife representatives point out that the company has given state regulators more than 50 boxes of evidence supporting the Travelers Life deal application, and Ellen Dunn, a lawyer for MetLife, said the company believes the deal will be good for everyone involved.
‘”MetLife cares about the public interest of Connecticut and other states in which its business operates,” Dunn said.
Meanwhile, MetLife is emphasizing in a preliminary prospectus filed today with the U.S. Securities and Exchange Commission that retaining key employees and keeping wholesaler relationships intact will be vital to efforts to make the Travelers Life deal work.
”’Loss of key personnel or higher than expected employee attrition rates could adversely affect the performance of the Citigroup [Life & Annuity] business and our ability to integrate it successfully,” MetLife warns in a discussion of risks that could affect the outcome of the deal. “Citigroup L&A management has advised us that since the announcement of the acquisition, employee departures from the Citigroup L&A business have been running at a significantly higher rate than the historical average.”
Elsewhere in the discussion of risks, MetLife says a shortage of new retail annuity product introductions by Travelers Life has hurt the unit’s ability to respond to the competition.
“Plans to expand distribution in the financial planner market and in banks have been canceled,” MetLife says. “Also, uncertainty regarding long-term integration plans has led to wholesaler turnover.”
The city of Hartford has posted links to documents giving Perez’s view of the deal at http://www.hartford.gov
The SEC has posted a copy of a preliminary prospectus for the MetLife-Travelers Life deal at http://www.sec.gov/Archives/edgar/data/1099219/000095012305007171/y09653b5e424b5.htm