Zurich Insurance Group subsidiary Farmers Group has agreed to acquire MetLife's property and casualty (P&C) business in the US together with the Farmers Exchanges for $3.94bn.
Zurich said it will contribute $2.43bn through FGI and the Farmers Exchanges $1.51bn.
The transaction gives the Farmers Exchanges1 a truly 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 Exchanges1 will offer their personal lines products on MetLife's industry-leading U.S. Group Benefits platform, which today reaches 3,800 companies and 37 million employees.
Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets.”
Farmers Exchanges1 expects to become the sixth-largest personal lines insurer in the U.S. with access to MetLife's network of agents. The business to be acquired includes 2.4 million policies, $3.6bn net written premiums in 2019 and 3,500 employees.
"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," said Zurich Group Chief Executive Officer Mario Greco.
"Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets."
"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," said Jeff Dailey, CEO of Farmers Group.
"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."
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% from 2023.
The deal is subject to regulatory approval and is expected to complete in 2Q2021.