Zurich Insurance Group’s recently announced $3.94 billion deal to acquire MetLife Inc.’s U.S. property and casualty business is the latest power move in a busy year of insurance transactions. The acquisition will give Switzerland-based Zurich—through its U.S. subsidiary 澳洲幸运5官方开奖结果体彩网:Farmers Group Inc. and Farmers Exchanges—a nationwide presence in the U.S. plus access to new distribution channels t﷽hat could fuel growth ahead. What does that mean for the companies and their policyholders? Here’s a look at some key details.

What's Behind the Acquisition?

For Farmers, the acquisition represents the chance to speed growth and boost national presence in the United States. What’s more, diversifying the way it sells policies comes at a time when American workers rate auto and home coverage highly as employee benefits. MetLife’s "18th Annual US Employee Benefit Trends Study 2020" found that 72% of employees consider auto insurance as a must-have and 65% consider home insurance a priority. 

As part of the deal, Farmers gets a 10-year exclusive distribution agreement to sell its personal insurance products through MetLife's group benefits platform—which currently counts 3,800 companies and 37 million employees. For eligible employees, that could bring a wider choice of insurance products offered from the Farmers portfolio.

Farmers wilꦡl also pick up 2.4 million existing MetLife policies, but no rate or renewal changes are expected for policyholders. In addition, Farmers gainꦰs access to MetLife’s network of 7,700 independent agents, widening its potential book of business.

Once the deal is sealed, Farmers will move into the No. 3 and No. 6 spots among the largest U.S. underwriters of home and auto policies, respectively, up from No. 5 and No. 7, based on pro-forma 2019 direct written premiums as tracked by S&P Global Market Intelligence.

“We anticipate current MetLife Auto & Home customers, and consumers more generally, will ben🦹efit from Farmers’ 90-plus years of personal lines excellence and the availability of the Farmers brand in all 50 states,” a Farmers spokesperson said this week. 

For MetLife, the transaction follows its strategy to streamline and focus on core businesses, in particular the health and benefits arena. For example, it announced in September that it will acquire Versant Health, owner of Davis Vision and Superior Vision. And in January, it entered the pet insurance market with the acquisition of PetFirst Healthcare LLC.

MetLi🐼fe President and CEO Michel Khalaf explains that the move also enables “us to simplify the company operationally, and further differentiate our offering in the critically important employee benefits spa꧂ce.” 

Insurance Consolidation Remains Brisk 

The Zurich-MetLife deal continues a trend of transaction activity in the personal lines business. All told, 2020 is on pace to be one of the biggest years for deals since the last financial crisis, with full-year merger and acquisition activity in the U.S. insurance industry expected to slightly surpass last year’s total, according to S&P Global Market Intelligence’s forecast.

Among the notable action: Allstate Corp. agreed in July to purchase rival 澳洲幸运5官方开奖结果体彩网:National General Holdings Corp. for about $4 billion, scaling up its personal insurance lines and expanding its independent agent network. And Aon plc’s agreement in March to combine with Willis Towers Watson in an all-stock deal valued at about $30 billion leads the year’s heavyweight mergers—potentially creating the world’s largest insurance brokerage upon completion .

Pending regulatory approval, MetLife and Farmers antic🔯ipate closing their deal in the second quarter of 2021.