MetLife Inc. (MET) on Monday said it would acquire Travelers Life & Annuity (search) from Citigroup Inc. (C) for $11.5 billion in cash and stock, a deal that will make it the largest individual life insurer in North America.

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.

In a transaction approved by the boards of both companies, 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, which manages $80 billion, including financial stocks like MetLife.

MetLife shares were up 31 cents to $40.25 on the New York Stock Exchange (search), while Citigroup shares were up 66 cents at $49.04.

MetLife said it may issue debt or convertible securities to finance the deal, or may sell assets, depending on market conditions. The transaction is expected to close this summer.

The purchase will "enable us to take full advantage of market opportunities and favorable demographic trends," said MetLife, an apparent reference to increasing demand from retiring baby-boomers for life insurance, annuities and other financial products.

MetLife said the transaction will boost earnings per share by 4 percent to 6 percent in 2006.

MetLife was advised by Banc of America and Goldman Sachs, while Citigroup advised itself.