The Swiss insurer struck with a $3.9 billion takeover of a U.S. rival. The move gives its Farmers subsidiary an U.S.-wide presence and new distribution channels, underpinning Zurich's 2022 targets.
Zurich is acquiring MetLife’s U.S. property and casualty business for $3.94 billion in cash via its 's U.S.-based subsidiary Farmers Group and Farmers Exchanges, it said in a statement on Friday. It is the Swiss insurer's first acquisition under CEO Mario Greco, who took the helm nearly five years ago.
The price of the deal, set to close in the second quarter, is subject to certain, undisclosed adjustments, Zurich said. It is buying includes 2.4 million policies, $3.6 billion net written premiums last year, and 3,500 employees. It will fund the deal with a roughly equal combination of internal resources – its own cash – and of hybrid debt.
All Cash Deal
The business enables the Swiss insurer to expand throughout the U.S. as well as tap new channels to distribute products. The firms also clinched a ten-year distribution deal for Farmers Exchange to sell its personal insurance via a MetLife platform. Zurich said the deal vaults Farmers Exchanges to the sixth-largest insurer in the U.S. in personal lines.
The Swiss insurer expects its capital position – currently at 190 percent under Swiss solvency rules – to remain strong following the transaction. The deal will add to Zurich's profits from 2022, and deliver a return on investment of approximately 10 percent from the following year, it said.
