A.M. Best Affirms Ratings of Citigroup Life Insurance Subsidiaries

Business Wire, July 2, 2002

Business Editors

A.M. Best Co. has affirmed the A (Superior) financial strength rating of Citigroup, Inc.'s (NYSE: C) principal life insurance entities, including The Travelers Insurance Company (Life Department) (TIC), led by both the Travelers Life & Annuity business segment and Primerica Life Insurance Company.

These ratings reflect the diversity, quality and strength of earnings and the superior level of risk-adjusted capitalization at each life subsidiary on a stand-alone basis. The overall high quality of the investment portfolios, excellent liquidity and strong capacity to generate favorable operating cash flows also support these ratings. A.M. Best also notes the high level of disclosure and transparency provided by management.

In addition to being the largest financial services organization in the United States with over $1.0 trillion in assets, Citigroup is one of the leading financial institutions in the world, serving individuals and corporations in more than 100 countries. The life insurance operations, considered strategically core to the Citigroup enterprise, provide a manufacturing platform for cross-selling among its global businesses. Citigroup's exceptionally diverse earnings, strong financial flexibility, prominent market positions, distinguished brand name and conservative asset/liability management practices also provide considerable insulation from adverse developments in its business activities and from changing economic conditions.

Citigroup's life insurance businesses enjoy significant brand recognition and maintain strong positions in their respective markets, ranking among the nation's 20 largest life insurance groups. Primerica is the largest U.S. writer of term life insurance with a unique distribution system including approximately 100,000 active agents in its affiliate, Primerica Financial Services. Significant cross-selling successes have been achieved in Travelers Life & Annuity's variable annuity products, Smith Barney mutual funds and Travelers Bank & Trust debt consolidation products. Growth in Primerica's agency force and niche product offerings have contributed to favorable operating performance, while international expansion is expected to provide future earnings growth. Travelers Life & Annuity is a leading writer of individual annuities and maintains prominent positions in the individual and corporate-owned life markets. The company is also active in the sale of group annuities, which includes guaranteed investment contracts. An extensive distribution franchise--including non-proprietary and proprietary channels, disciplined expense management and targeted product design--has contributed to favorable earnings growth and capital generation. Both companies have a history of upstreaming significant dividends to the parent, with over $472 million paid in 2001.

Partially offsetting these strengths is TIC's exposure to lower credit quality issuers--predominantly within its fixed income portfolio--which have emerged recently due to the general credit deterioration in the market. While these capital losses are expected to have a somewhat adverse impact on current investment income and total returns, A.M. Best believes the potential credit losses will have a minimal impact on the overall financial strength of the company.

Citigroup has also selectively engaged in acquisition and divestiture activity in recent years to achieve further revenue growth and to enhance earnings stability, including the acquisition of Associates First Capital Corp. (Associates) in November 2000. Associates accelerated the global expansion of consumer financial services and provided credit accident and health, credit life, accidental death and dismemberment, involuntary unemployment and personal property insurance to the organization.

In March 2002, Citigroup spun-off approximately 23% of Travelers Property Casualty Corp. (TPC) (formerly The Travelers Insurance Group, Inc. and parent company of TIC), in an initial public offering (IPO) that raised $4.1 billion in proceeds and nearly $900 million from the sale of convertible bonds. Subsequently, the remaining ownership interest in TPC will be distributed by way of a tax-free spin-off to shareholders, so Citigroup will retain approximately 9.9% ownership of the newly public company. Prior to the offering, TIC was contributed to TPC's immediate parent company, PFS Services, Inc., and remains a wholly owned, indirect subsidiary of Citigroup. A.M. Best also considers Citigroup's right to continue using the Travelers name as strategically important to the life insurance operations given its brand recognition and established market profile.

At December 31, 2001, Citigroup had revenues of over $80 billion and shareholders' equity of approximately $81.0 billion (GAAP) and provides retail, commercial and investment banking services, as well as insurance, consumer finance and investment management services.

The A (Superior) financial strength rating of the following subsidiaries of Citigroup, Inc. was affirmed: