In 1995, The Travelers Group was formed. That same year, Aetna's real estate and accident business was acquired by Travelers. In April 1998, Citicorp and Travelers Group merged to form Citigroup. This merger allowed Citigroup to serve more than 100 million customers in 100 countries, while also realizing cost savings and marketing benefits from the combination of the two companies.
Citicorp is the parent company of Citibank, the world's largest credit card issuer. On the other hand, Travelers is the owner of Salomon Smith Barney, Travelers life, property and accident insurers, and Primerica, a financial services firm. Despite recent changes to laws that once separated banks from brokerage firms, most banks are still prohibited from entering the insurance business. In April 1998, Citicorp and Travelers Group announced their merger, which was the largest corporate combination in history.
This merger created a financial services giant that offered banking, insurance and investment operations in 100 countries. Citicorp had already established a global retail franchise along with its worldwide corporate banking business. Meanwhile, Travelers was an investment and insurance conglomerate that had acquired Salomon Brothers Inc the previous year. In order to maximize profits from this merger, Citigroup decided to sell off Travelers in 2002. This decision highlighted the difficulties banks face when attempting to cross-sell banking and insurance products.
On Tuesday of that same year, Citigroup distributed more than 219 million shares of Travelers Class A common stock and more than 450 million shares of Travelers Class B common stock to Citigroup shareholders. Citicorp and Travelers Group were aware that current laws prohibit bank holding companies from participating in insurance. Despite this knowledge, they still chose to merge in order to create a financial services giant that could offer banking, insurance and investment operations in 100 countries.