September 24, 2023


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MetLife to Sell Car and Home Insurance Unit to Zurich for Nearly $4 Billion

Swiss insurer Zurich Insurance Group AG said it would acquire MetLife Inc.’s car and home insurance business for $3.94 billion in cash, a move that will substantially boost the size of its Farmers business in the U.S.

The deal reflects a push by big car insurers to gain more scale to pay for advertising and as technological change is coursing through the car- and home-insurance industry. For MetLife, the divestiture sheds a relatively small unit at what analysts say is a premium price.

An important part of the deal is that Farmers, which traditionally has relied on agents for sales, will offer its policies through employee-benefits programs run by MetLife. This will diversify the way Farmers distributes policies, while MetLife will earn commissions on those Farmers sales. The deal will enable MetLife to continue to focus on selling a diverse array of products to workers enrolled in its benefit programs.

Zurich, through its subsidiary Farmers Group Inc., will contribute $2.43 billion to the deal, while Farmers Exchanges, its U.S. partner, will pay $1.51 billion. Zurich earns fees for certain administrative and management services provided to Farmers Exchanges.

The transaction will make Farmers the seventh-largest insurer in the U.S. by property-casualty premium volume, up from ninth, the company said. Pro forma premiums would be $24.2 billion from $20.5 billion previously based on 2019 data, it said. Its percentage market share will increase to 5.5{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb} from 4.4{de3fc13d4eb210e6ea91a63b91641ad51ecf4a1f1306988bf846a537e7024eeb}, said David Havens, a managing director at Imperial Capital LLC.