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Zurich buys MetLife’s P&C business in the US

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Zurich has agreed a deal to acquire MetLife’s $US4 billion ($5.2 billion) property and casualty (P&C) business in the US.

In joint agreement with the Farmers Exchanges, Zurich subsidiary Farmers Group Inc (FGI) will contribute $US2.43 billion ($3.22 billion) and the Farmers Exchanges will pay $US1.51 billion ($2 billion).

Farmers Exchanges expects to become the sixth-largest personal lines insurer in the US.

MetLife’s business includes 2.4 million policies, $US3.6 billion ($4.78 billion) in annual net written premium and 3500 employees.

Under the transaction, FGI acquires 100% of the MetLife US P&C business and immediately sells it, less certain assets and liabilities, to the Farmers Exchanges.

Zurich has no ownership interest in the Farmers Exchanges but FGI provides non-claims services to it and receives fees.

“The acquisition … will further boost the share of Zurich’s profits linked to stable fee-based earnings,” Zurich Group CEO Mario Greco said.

“Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets.”

Zurich says the deal will add to its earnings from the first full year after completion – due in the second quarter of 2021 pending regulatory approval – and will deliver Zurich a return on investment of around 10% from 2023.

Farmers Exchanges achieves nationwide presence as well as a 10-year exclusive distribution agreement to offer its personal lines products on MetLife’s Group Benefits platform, which reaches 37 million US employees.

“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,” Jeff Dailey, CEO of FGI, says.