Citigroup (C) Closes Reinsurance Deal With Munich Re

As part of its long-term strategy to shrink non-core assets, Citigroup, Inc. (NYSE:C) announced the sale of its special purpose financial insurance company, Financial Reassurance Company 2010, Ltd. (FRAC), to a subsidiary of Munchener Ruckversicherungs-Gesellschaft Aktiengesellschaft (Munich Re).

FRAC, currently reinsures term life insurance policies which are issued by Primerica Life Insurance Company of Canada. The company is a subsidiary of Primerica, Inc., which has remained in force since Dec 18, 2009.

FRAC was reported as part of Citi Holdings, a business segment of Citigroup. The segment comprises consumer loans, international consumer lending, certain portfolios of securities, loans and other assets along with retail alternative investments. Citigroup has determined that some of these asset portfolios are not central to its core operations and hence its plans of divestiture.

Though the financials of the transaction were not disclosed, the company reported that the sale resulted in a reduction of approximately $460 million of assets from the Citi Holdings’ balance sheet. Citi’s Institutional Clients Group acted as advisors for the company on this transaction.

Citi Holdings’ CEO Francesco Vanni d'Archirafi said, "This transaction is a positive outcome for Citi and joins this business with an industry leader, Munich Re. It also represents yet another step in our strategy to reduce the assets and businesses in Citi Holdings."

Citigroup’s main motive behind these runoffs is to ultimately reduce the company's risk profile and free up capital for investment in its core business which will further improve the company’s valuations. Notably, at the end of second-quarter 2016, Citi Holdings’ assets decreased 47% year over year and represented just 4% of the company’s total assets.

Currently, Citigroup, Inc. carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the finance space include Enterprise Financial Services Corp. (NYSE:C) , Comerica Incorporated (NYSE:CMA) and State Street Corporation (NYSE:STT) .

Enterprise Financial witnessed an upward earnings estimate revision of approximately 6% over the past 60 days. Its share price has gained 11.6% year to date. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Comerica currently carries a Zacks Rank #2 (Buy). Over the past 60 days, its Zacks Consensus Estimate has been revised 1.9% upward. Its share price has increased 12.3% year to date.

State Street also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 6.1% over the past 60 days and its share price is up 6.4% year to date.

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