NEW YORK (Reuters) – Switzerland’s Zurich Insurance Group AG ZURN.S is in advanced talks to acquire MetLife Inc’s MET.N U.S. property and casualty (P&C) car and home insurance unit for close to $4 billion, according to people familiar with the matter.
The deal, executed through its Farmers Group Inc subsidiary, would expand Zurich Insurance’s P&C business, as the industry grapples with fallout from the COVID-19 pandemic, which drove up claims for business interruptions and event cancellations.
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 the negotiations conclude successfully, a deal could be announced by early December, the sources said.
MetLife declined to comment, while Zurich did not respond to a comment request.
MetLife, whose offerings also include life insurance, employee benefits and asset management, earlier this month reported a 68% drop in third-quarter adjusted earnings at its U.S. property and casualty division, to $18 million.
The decline was driven by catastrophe losses caused by storms in the United States, 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 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.
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.
Reporting by David French in New York; Editing by Jan Harvey and Matthew Lewis