Zurich Insurance coverage and Farmers Exchanges have agreed to purchase MetLife’s U.S. property and casualty enterprise for $3.94 billion, the insurers mentioned on Friday, after the COVID-19 pandemic made motor and residential insurers extra worthwhile.
Motor and residential insurers have had a windfall as authorities lockdowns to curb the unfold of an infection have diminished the variety of claims for highway accidents and burglaries.
Insurers, resembling Zurich, against this have confronted hefty claims from occasion cancellation and enterprise interruption and premium charges are rising.
“It’s an acquisition that enhances very nicely…what we see on the industrial facet the place the market is hardening,” Zurich Chief Government Officer Mario Greco instructed a media name.
The Swiss insurer will contribute $2.43 billion to the deal by way of its Farmers Group Inc (FGI) unit, whereas the Farmers Exchanges will contribute $1.51 billion, Zurich mentioned.
Reuters was the primary to report on Nov. 20 that Zurich was in talks to purchase the MetLife enterprise.
The deal will give Farmers Exchanges, to which FGI gives sure administrative and administration companies, a nationwide presence in the US and entry to new distribution channels, Zurich mentioned.
It should additionally assist Zurich ship its development targets for 2022. Chief monetary officer George Quinn instructed the decision that the insurer’s targets didn’t rely on acquisitions, however they “can speed up what we wish to obtain.”
MetLife President and CEO Michel Khalaf mentioned the sale would enable the life insurer “to deal with our core strengths.”
The deal is the newest within the sector.
Denmark’s Tryg and Canada’s Intact Monetary are shopping for British residence and motor insurer RSA, and Finland’s Sampo and South Africa’s Rand Service provider Funding is shopping for Britain’s Hastings.
Shares in Zurich had been down 1.3% at 0825 GMT in a 0.8% decrease European insurance coverage market. KBW analysts referred to as the transaction a “nice strategic deal,” however reiterated their underperform ranking on the inventory.
The MetLife enterprise to be acquired consists of 2.4 million insurance policies, $3.6 billion of web written premiums in 2019 and three,500 staff, Zurich mentioned.
Zurich mentioned it needed to fund FGI’s portion of the deal by way of a roughly equal mixture of inside sources and hybrid debt.
Completion of the transaction is topic to regulatory approvals and is anticipated to happen within the second quarter of 2021.
(Reporting by Silke Koltrowitz in Zurich and Carolyn Cohn in London; modifying by Aditya Soni, Mark Potter and Barbara Lewis)
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