Zurich subsidiary strikes $3.94bn deal to buy MetLife’s P&C business

Zurich Insurance Group subsidiary Farmers Group (FGI) has struck a deal to acquire MetLife’s property and casualty (P&C) business in the US together with the Farmers Exchanges for $3.94 billion, in a move the Swiss insurer hopes will strengthen its ability to achieve its growth targets for 2022.

The acquisition is expected to contribute to Zurich’s earnings from the first full year after completion and is expected to deliver Zurich a return on investment of approximately 10 percent from 2023.

Zurich will contribute $2.43 billion through FGI and the Farmers Exchanges $1.51 billion. The acquired business includes 2.4 million policies, $3.6 billion net written premiums in 2019 and nearly 3,500 employees.

The transaction will give Farmers Exchanges nationwide presence and access to new distribution channels with the potential to accelerate growth. This includes a 10-year exclusive distribution agreement through which the Farmers Exchanges will offer their personal lines products on MetLife’s US group benefits platform.

Farmers also expects to become the sixth-largest personal lines insurer in the US with access to MetLife’s network of agents.

Completion of the transaction is anticipated in the second quarter of 2021.

Zurich Group chief executive officer Mario Greco, said: “The acquisition significantly increases the potential for growth at the Farmers Exchanges and will further boost the share of Zurich’s profits linked to stable fee-based earnings.

“Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets.”

Jeff Dailey, chief executive officer of Farmers Group, added: “The acquisition of MetLife’s P&C business is a unique opportunity to accelerate growth and to achieve a significant presence in all 50 states. MetLife’s distribution channels complement the Farmers Exchanges’ existing strength in the exclusive agent channel, deepen their presence in the fast-growing independent agent channel and provides entry into the worksite marketing channel via a leading platform, with the 10-year exclusive distribution agreement through MetLife Group Benefits.”

MetLife president and CEO Michel Khalaf said: “Following our recently announced acquisition of Versant Health, which will catapult MetLife to the No. 3 vision care provider in the U.S. by membership, this transaction is another bold step in the execution of our Next Horizon strategy. It will allow us to focus on our core strengths, simplify the company operationally, and further differentiate our offering in the critically important employee benefits space.”