Zurich Insurance’s subsidiary Farmers Group has agreed to team up with Farmers Exchanges to buy Metlife’s US property and casualty business for $3.94bn (£2.96bn).
Zurich will contribute $2.43bn through FGI, while Farmers Exchanges will chip in $1.51bn, Zurich 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,” said Zurich chief executive Mario Greco.
“Together with the continued increase in rates in commercial insurance, this transaction will strengthen our ability to achieve our 2022 targets.”
Metlife’s property and casualty business includes 2.4 million policies, $3.6bn net written premiums in 2019 and 3,500 employees.
Zurich said it expects the purchase to contribute to its earnings from the first full year. It also said it is expected to deliver a return on investment of around 10 per cent from 2023.
The insurer said it expects to fund Farmers Group’s portion of the purchase through a roughly equal combination of internal resources and hybrid debt.
Jeff Dailey, chief executive of Farmers Group, said: “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.”