- Zurich subsidiary Farmers Group, Inc. and Farmers Exchanges agree to acquire MetLife’s U.S. property and casualty business for USD 3.94 billion
- Transaction to give Farmers Exchanges nationwide presence and access to new distribution channels that provide strong platform for accelerated growth
- Purchase to further increase Zurich’s stable, fee-based earnings streams and add to earnings from first full year after completion
- Acquisition expected to support delivery of Zurich’s growth targets for 2022
Chicago, IL (Dec. 11, 2020) – Zurich Insurance Group (Zurich) subsidiary Farmers Group, Inc. (FGI) has agreed to acquire MetLife’s property and casualty (P&C) business in the U.S. together with the Farmers Exchanges[1] for USD 3.94 billion.[2] Zurich will contribute USD 2.43 billion through FGI and the Farmers Exchanges USD 1.51 billion.
The transaction gives the Farmers Exchanges 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 Exchanges 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.
Farmers Exchanges 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, USD 3.6 billion 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, Chief Executive Officer of Farmers Group, Inc. “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.
Zurich expects to fund Farmers Group, Inc.’s portion of the acquisition through a roughly equal combination of internal resources and hybrid debt. Following the transaction, Zurich’s capital position is expected to remain strong with the pro-forma Swiss Solvency Test ratio[3] as of September 30, 2020, at around 190%.
Completion of the transaction is subject to regulatory approvals and is anticipated to occur in the second quarter of 2021. The purchase price is subject to certain adjustments.
Further Information
Click here for an investor presentation, a PDF of the news release, associated disclaimers and cautionary statements, and contact information.
Notes
1. Zurich Insurance Group has no ownership interest in the Farmers Exchanges. Farmers Group, Inc., a wholly owned subsidiary of the Zurich Insurance Group, provides certain non-claims services and ancillary services to the Farmers Exchanges as its attorney-in-fact and receives fees for its services.
2. As part of the transaction, FGI acquires 100% of the MetLife U.S. P&C business and immediately sells the U.S. P&C business less certain assets and liabilities to the Farmers Exchanges. Further details of the structure of the transaction are available on slide 5 of an investor presentation on our website.
3. Estimated Swiss Solvency Test ratio, after application of standard yield curves as allowed by FINMA.
About Zurich
Zurich North America is one of the largest providers of insurance solutions and services to businesses and individuals. Our customers represent industries ranging from agriculture to construction and include more than 90 percent of the Fortune 500. We’ve backed the building of some of the most recognizable structures in North America — from the Hoover Dam to Madison Square Garden to the Confederation Bridge. Our North American, LEED Platinum® headquarters is located in the Chicago area. We employ approximately 9,000 people in North America and have offices throughout the U.S. and Canada. Further information is available at www.zurichna.com.
Zurich Insurance Group (Zurich) is a leading multi-line insurer that serves its customers in global and local markets. With about 55,000 employees, it provides a wide range of property and casualty, and life insurance products and services in more than 215 countries and territories. Zurich’s customers include individuals, small businesses, and mid-sized and large companies, as well as multinational corporations. The Group is headquartered in Zurich, Switzerland, where it was founded in 1872. The holding company, Zurich Insurance Group Ltd (ZURN), is listed on the SIX Swiss Exchange and has a level I American Depositary Receipt (ZURVY) program, which is traded over-the-counter on OTCQX Further information is available at www.zurich.com.
SOURCE: Zurich North America
Tags: Acquisition, Farmers, MetLife, Property/Casualty (P&C) insurance, United States (USA), Zurich
