Citigroup is to spin off its Travelers Property Casualty insurance unit, in a two-part exercise, as part of its plan to raise money for acquisitions in other areas of business.
It will first sell up to 20% of the company in an initial public offering, expected in the first quarter of 2002. Pending regulatory approvals, Citigroup will then distribute remaining shares to its shareholders.
In addition to its proceeds from the IPO, Citigroup will receive a dividend of about $1bn (£689.8m) from Travelers Property Casualty, to be paid next year.
Even after the exercise, Citigroup will retain significant ties to the operation. Citigroup director Robert Lipp will serve as chairman and chief executive of the company.
Citigroup will also continue to distribute Travelers Property Casualty products and provide the company with investment advisory services.
The exercise marks a retreat for Citigroup's cross-selling strategy and could herald similar disposals by other financial conglomerates.
