The transaction will make MetLife's already dominant position in the U.S. individual life insurance market even larger and make it No. 2 in the annuities market behind Hartford Life Insurance Co.

For Citigroup, it is another step back from the concept of one-stop financial shopping -- combining insurance, brokerage and banking under one roof -- which it pioneered in the 1990s.

Insurance turned out to be less profitable and slower growing than other financial businesses. Citigroup is now concentrating on retail and investment banking.

As part of the deal, MetLife will market its financial products through Citigroup for the next 10 years, including through Smith Barney retail brokerages and Citibank branches.

Citigroup will receive $1 billion to $3 billion of the purchase price in MetLife stock and the remainder in cash, giving it an after-tax gain of about $2 billion subject to adjustments at closing.

"This deal employs some of MetLife's excess capital in a potentially higher-return business and gives it more distribution," said Stuart Quint, analyst with Gartmore Global Investments in West Conshohocken, Pennsylvania, which manages $80 billion, including financial stocks like MetLife.

The businesses being acquired by MetLife generated revenue of $5.2 billion and net income of $901 million in 2004, with total net assets of $96 billion.

MetLife shares were down 19 cents at $39.75 at the close on the New York Stock Exchange, while Citigroup shares were up 67 cents at $49.05.