In connection with the deal, Farmers Exchanges will offer its personal lines products on MetLife’s US group benefits platform
MetLife has agreed to sell its auto and home insurance business, Metropolitan Property and Casualty Insurance, to Zurich Insurance Group’s subsidiary Farmers Group (FGI) and Farmers Exchanges for $3.94bn in an all-cash deal.
Farmers Group, as an attorney-in-fact, provides certain non-claims services and ancillary services to Farmers Exchanges and is paid fees for its services.
Zurich Insurance does not hold any stake in Farmers Exchanges. The Swiss insurance group said that it will contribute $2.43bn through Farmers Group, while Farmers Exchanges will pay $1.51bn for the deal.
MetLife President and CEO Michel Khalaf said: “Following our recently announced acquisition of Versant Health, which will catapult MetLife to the No. 3 vision care provider in the U.S. by membership, this transaction is another bold step in the execution of our Next Horizon strategy.
“It will allow us to focus on our core strengths, simplify the company operationally, and further differentiate our offering in the critically important employee benefits space.”
In connection with the deal, MetLife and the Farmers Exchanges have entered into a 10-year strategic partnership.
Under the partnership, Farmers Exchanges will provide its personal lines products on MetLife’s US group benefits platform, which is said to reach 3,800 employers and nearly 37 million eligible employees.
Farmers Exchanges will also get access to MetLife’s network of 7,700 independent agents, while taking up responsibility for the latter’s existing retail property and casualty customers.
The business involved in the deal includes 2.4 million policies, net written premiums of $3.6bn in 2019, and also 3,500 employees.
Zurich Group CEO Mario Greco said: “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.
“Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets.”
The transaction, which is subject to regulatory approvals and other customary closing conditions, is anticipated to be completed in Q2 2021.
Rothschild served as financial advisor and Debevoise & Plimpton acted as a legal counsel to MetLife for the transaction.