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Insurer MetLife’s US Business To Acquired By Zurich And Farmers For $3.94 Billion

Insurer MetLife’s US Business To Acquired By Zurich And  Farmers For $3.94 Billion
The property and casualty business in the United States of MetLife is to be acquired by Zurich Insurance and Farmers Exchanges in a deal which is worth $3.94 billion, said the insurers on Friday as motor and home insurers have become more profitable because of the Cvoid-19 pandemic.
The number of claims for road accidents and burglaries during the pandemic has reduced significantly because of the stay at home orders of governments across the world in an effort to prevent the spread of the viral infection which has been very beneficial for motor and home insurance companies.
On the other hand, event cancellation and business interruptions because of the pandemic has resulted in hefty claims being made with insurers like Zurich along with a rise in premium rates.
"It is an acquisition that complements very well...what we see on the commercial side where the market is hardening," Zurich Chief Executive Officer Mario Greco told a media call.
Zurich said that $2.43 billion to the deal through its Farmers Group Inc (FGI) unit will be provided by the Swiss insurer while $1.51 billion of the deal will be provided by Farmers Exchanges.
There were media reports previously in November about talks between Zurich and MetLife for the deal.
A nationwide presence in the United States as well as access to new distribution channels will be available for Farmers Exchanges, to which FGI provides certain administrative and management services, because of the deal, Zurich said.
The deal will help Zurich to achieve its growth targets for 2022. However the target set by the insurer were not dependent on acquisitions, the company’s chief financial officer George Quinn told the call, and added that deals such as these "can accelerate what we are looking to achieve".
The sale would allow the life insurance company MetLife "to focus on our core strengths", said its President and CEO Michel Khalaf.
This deal is the latest in the global insurance industry.
In other deals, the British home and motor insurer RSA is being acquired jointly by Denmark's Tryg and Canada's Intact Financial while Britain's Hastings is being acquired by Finland's Sampo and South Africa's Rand Merchant Investment.
The deal was described as a "great strategic deal" by analysts at KBW while still retaining their underperform rating for the stocks of Zurich.
Zurich said that 2.4 million policies, $3.6 billion of net written premiums in 2019 and 3,500 employees of MetLife in the United States will be acquired by the two companies as a partr of the deal.
A roughly equal combination of internal resources and hybrid debt will be used to fund FGI's portion of the deal, Zurich said.
The companies expect the deal to get completed in the second quarter of 2021 pending approval by the regulatory authorities in multiple countries.

Christopher J. Mitchell

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