Zurich Insurance to buy MetLife’s property and casualty business for $4bn

The cost of the purchase will be divided between Zurich’s Farmers Group and Farmers Exchanges subsidiaries in the US

FILE PHOTO: The logo of Zurich Insurance is seen in Davos, Switzerland, January 20, 2020.  REUTERS/Arnd Wiegmann/File Photo

Zurich Insurance agreed to buy MetLife’s US property and casualty business for $3.94 billion in cash, extending its reach of its Farmers subsidiaries in the world’s largest economy.

The cost of the purchase will be divided between Zurich’s Farmers Group and Farmers Exchanges subsidiaries in the US, the Swiss insurer said in a statement on Friday.

The Farmers businesses will gain a nationwide presence in the US and access to MetLife’s distribution channels to 3,800 companies for 10 years, Zurich said. That may help boost revenue at the unit, where gross written premiums declined 3 per cent to $15.3bn in the third quarter.

The purchase adds to one of the busiest years for insurance deals since the financial crisis, as companies seek to emerge as the strongest players when the coronavirus pandemic subsides.

The MetLife deal is expected to contribute to Zurich’s earnings from the first full year after its completion in the second quarter and deliver a return on investment of approximately 10 per cent from 2023, according to the statement.

The business includes 2.4 million policies and a reported $3.6bn net written premiums in 2019. The transaction is still subject to regulatory approvals.

“After this acquisition we will be in the top 10 in every one of the 50 American states, which wasn’t the case before,” chief executive Mario Greco said on a conference call.

MetLife’s strength in the US Northeast and Midwest will add to Zurich’s presence in the South and West regions, he said.

The deal allows MetLife to simplify its operations and pursue its strategy of expanding in the US healthcare market, the company said separately.

MetLife recently announced the acquisition of Versant Health, which will make it the number three vision care provider in the US, according to the statement.

Farmers Exchanges, which is owned by its policyholders and managed by Zurich, intends to free up capital for the purchase by increasing the amount of reinsurance it uses, chief financial officer George Quinn said on the call.