According to sources familiar with the matter at hand, Zurich Insurance Group AG is in advanced negotiations to acquire MetLife Inc’s property and casualty (P&C) car and home insurance business for around $4 billion.
Late on Friday, Zurich Insurance issued a statement confirming that it was in discussions to acquire MetLife’s U.S. property and casualty business while cautioning that the deal was not certain. It did not provide a value to the potential deal.
The potential purchase, executed through its Farmers Group Inc subsidiary, will help expand Zurich Insurance’s P&C business, which took a hit from the coronavirus-induced COVID-19 pandemic which hiked up claims for business interruptions and event cancellations.
The potential deal will also allow MetLife to exit a business in which it faces fierce competition from larger players including Progressive Insurance, State Farm, and GEICO.
In the event the ongoing negotiations conclude successfully, a deal could be announced as early as December, said sources.
MetLife declined comment.
New York-based MetLife, whose offerings include life insurance, asset management and employee benefits, had earlier reported a 68% drop in third quarter EBITDA at its U.S. property and casualty division, to $18 million. The downturn in revenues was largely driven by storms in the United States, it said.
During an earnings call for its latest quarter, the company’s chief executive, Michel Khalaf said, the P&C business had “an important strategic connection” to the rest of MetLife, but had declined to comment as to whether he would sell it.
Zurich Insurance’s U.S. 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.
According to data provider S&P Global Market Intelligence, Farmers Insurance was the 5th and 7th largest provider of home and auto insurance, respectively, in the United States during 2019. MetLife was 14th and 18th, respectively.