Zurich and Farmers Exchanges to buy MetLife’s US P&C business for $3.94bn

Written by Adam Cadle

11/12/2020

Zurich Insurance Group subsidiary, Farmers Group, Inc. (FGI), has agreed to acquire MetLife’s property and casualty (P&C) business in the US together with the Farmers Exchanges for US$3.94bn.

Zurich will contribute US$2.43bn through FGI and the Farmers Exchanges US$1.51bn.

The transaction gives the Farmers Exchanges a nationwide presence and access to new distribution channels with the potential to accelerate growth.

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’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 as of 30 September 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.

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