Swiss insurer Zurich is to develop within the US with the $3.9bn acquisition of MetLife’s property and casualty insurance coverage enterprise.
The MetLife enterprise sells motor and residential cowl, and can give Zurich added scale on the earth’s largest insurance coverage market.
The corporate is teaming up with Farmers Exchanges, its current US associate, to make the acquisition, which can deliver with it $3.7bn of annual premiums and $245m of earnings.
The deal will mix the seventh and 18th-largest property and casualty insurance coverage companies within the US.
As with their current association, Farmers will carry the insurance coverage danger from the acquired enterprise and Zurich will present funding administration and different providers in alternate for a payment. Zurich is paying $2.4bn of the acquisition worth whereas Farmers is paying the remainder.
“The acquisition considerably will increase the potential for development on the Farmers Exchanges and can additional enhance the share of Zurich’s earnings linked to steady fee-based earnings,” mentioned Mario Greco, Zurich’s chief government. “Along with the continued enhance in charges in industrial insurance coverage, this transaction will strengthen our skill to attain our 2022 targets.”
MetLife’s important enterprise is in life insurance coverage, with simply 5 per cent of the group’s earnings coming from the property and casualty insurance coverage enterprise that Zurich and Farmers are shopping for.
Michel Khalaf, MetLife’s chief government, mentioned the deal was “one other daring step” within the execution of its technique and would permit the corporate to deal with its core companies.
After asserting the sale, MetLife mentioned it might purchase again $3bn of shares.