In a potential tie-up that some Wall Street analysts, according to the WSJ, call “a good deal” for MetLife shareholders, Zurich Insurance Group has confirmed that it is in advanced negations through its Farmers Group to acquire MetLife’s auto and home insurance unit. A Reuters report suggests the deal could fetch around $4 billion.
While MetLife has been expanding its benefits programs, having recently agreed to buy vision insurer Versant Health for $1.7 billion, its P&C division has suffered strong competition from competitors like GEICO, Progressive and State Farm.
The deal comes after a poor third quarter for MetLife’s P&C division – adjusted earnings at its US property and casualty arm slumped 68% to just $18 million on $3.7 billion of premiums, 66% of which was from auto coverage, with the remaining third being home insurance. The poor results followed the company’s biggest natural catastrophe losses in a decade, which overwhelmed the improvement in auto claims during the COVID pandemic.
Although the insurer’s share price has nearly doubled from its March $23 low, it is still languishing below the $52 it reached in late February.
Farmers Insurance Group ranked 9th in the US for P&C premiums last year, accounting for just under 3% of the market.
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Sources close to the negotiations have indicated that the plan is to announce the deal’s terms next month, as long as no unforeseen glitches arise.