Zurich Insurance coverage and Farmers Exchanges have agreed to purchase MetLife’s U.S. property and casualty enterprise for $3.94 billion, the insurers stated 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 decreased the variety of claims for street accidents and burglaries.
Insurers, corresponding to 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 effectively…what we see on the industrial aspect the place the market is hardening,” Zurich Chief Government Officer Mario Greco advised a media name.
The Swiss insurer will contribute $2.43 billion to the deal by its Farmers Group Inc (FGI) unit, whereas the Farmers Exchanges will contribute $1.51 billion, Zurich stated.
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 offers sure administrative and administration companies, a nationwide presence in the US and entry to new distribution channels, Zurich stated.
It would additionally assist Zurich ship its progress targets for 2022. Chief monetary officer George Quinn advised the decision that the insurer’s targets didn’t depend upon acquisitions, however they “can speed up what we wish to obtain.”
MetLife President and CEO Michel Khalaf stated 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 dwelling 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 have been down 1.3% at 0825 GMT in a 0.8% decrease European insurance coverage market. KBW analysts known as the transaction a “nice strategic deal,” however reiterated their underperform ranking on the inventory.
The MetLife enterprise to be acquired contains 2.4 million insurance policies, $3.6 billion of internet written premiums in 2019 and three,500 workers, Zurich stated.
Zurich stated it wished to fund FGI’s portion of the deal by a roughly equal mixture of inner assets 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; enhancing by Aditya Soni, Mark Potter and Barbara Lewis)
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