Travelers Cos, In Ironic Twist, Takes Citi's Place In Dow
01 Junho 2009 - 3:41PM
Dow Jones News
The red umbrella is back in the Dow.
In an ironic twist, Citigroup Inc. (C) will soon lose its place
in the Dow Jones Industrial Average to Travelers Companies Inc.
(TRV), a property-and-casualty insurance company Citi sold only
seven years ago.
In the corporate world, the two companies are something like
estranged divorcees. Travelers merged its operations - and its
celebrated red umbrella logo - with Citicorp in 1998 in one of the
largest corporate mergers ever. Sandy Weill, head of Travelers,
became Citigroup's sole chief executive and chairman after pushing
out Citicorp chief John Reed.
The two companies began disentangling themselves even before
Weill left Citi in 2006. In fact, it was only two years ago that
Citigroup sold the red umbrella logo, long praised by brand
consultants, back to Travelers.
The news is the latest embarrassment for Citi, which on June 8
will lose its place in the Dow after it gorged on boom-time
mortgages and other real estate debt, accepted billions in rescue
funds from the U.S. government, and watched its stock fall as low
as 97 cents.
"This has no impact on the company's strategy or our efforts to
return Citi to sustained profitability," the New York bank said
Monday. "Citi has strong businesses and good growth prospects."
Travelers, meanwhile, has fared much better than most of its
insurer counterparts over the course of the ongoing global
financial crisis. Its shares are down 25% over the last two years -
a relatively palatable decline compared to Citi's 93% tumble. The
Dow Jones Industrial Average is down 38% over the same period.
A spokeswoman for Travelers was not able to comment
immediately.
Shares in Citi were recently down 0.5% to $3.70 in composite
trading, while stock in Travelers was recently up 3.8% to
$42.21.
Travelers is also benefiting from the fall of another titan of
American finance - American International Group Inc. (AIG) - which
has accepted more than $100 billion in public support after betting
the farm on its once-obscure credit-default swaps business.
Dow Jones, which publishes this and other newswires, removed AIG
from its industrial average in last September after the government
took a nearly 80% stake in the company. Instead of replacing AIG
with another insurer, Dow Jones instead selected Kraft Foods Inc.
(KFT).
Like AIG and Citigroup, Travelers itself has a rich history that
reaches back into modern America history. Founded in 1864 by a
stonecutter, the company sold automotive insurance as early as 1901
and became the first firm to offer aviation insurance in 1919.
Travelers also underwrote the U.S. government's Manhattan
Project, under which the U.S. military built the world's first
atomic bomb.
The firm introduced its red umbrella logo in 1960.
News Corp. owns Dow Jones, publisher of this newswire.
-By Marshall Eckblad, Dow Jones Newswires; 201-938-4306;
marshall.eckblad@dowjones.com