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Jeddah - Yasmine El Tohamy - NEW YORK: Switzerland’s Zurich Insurance Group is in advanced talks to acquire MetLife Inc’s US property and casualty (P&C) car and home insurance unit for close to $4 billion, according to close sources.
Zurich Insurance issued a statement late on Friday confirming it was in discussions to acquire MetLife’s US property and casualty business and cautioning that no deal was certain. It did not comment on the value of the deal.
Any agreement, executed through its Farmers Group Inc. subsidiary, would expand Zurich Insurance’s P&C business, as the industry grapples with fallout from the coronavirus disease pandemic, which drove up claims for business interruptions and event cancelations.
It would also allow MetLife to exit a business in which it faces fierce competition from larger players such as State Farm, GEICO and Progressive Insurance.
Its P&C business focuses more on car insurance, an area in which people have made fewer claims due to spending less time on the road during the pandemic.
If negotiations conclude successfully, a deal could be announced by early December, the sources said.
MetLife declined to comment.The company, whose offerings also include life insurance, employee benefits and asset management, earlier this month reported a 68 percent drop in third-quarter adjusted earnings at its US property and casualty division, to $18 million. The decline was driven by catastrophe losses caused by storms in the US, it said.
The New York-based company’s chief executive, Michel Khalaf, said during its latest quarterly earnings call that the P&C business had “an important strategic connection” to the rest of MetLife, but declined to comment on whether he would sell it.
MetLife has been turning to dealmaking to move into more profitable areas.
It said in September it would buy vision-care benefits company Versant Health for $1.68 billion, which would make it the third-largest vision insurer in the United States by membership, and announced in December it would enter the pet insurance market by acquiring PetFirst Healthcare.
Zurich Insurance’s US footprint currently includes Farmers Group, an administrator of insurance policies for Farmers Insurance. Zurich Insurance acquired Farmers Group in 1998, while Farmers Insurance is owned by its policyholders.
Farmers Insurance was the fifth- and seventh-largest provider of home and auto insurance, respectively, in the United States in 2019, according to data provider S&P Global Market Intelligence. MetLife was 14th and 18th, respectively.
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