So ...Why is Farmer's Buying Metlife?

[marindependent]

Zurich and Famers Agree to Buy Metlife.

"Zurich Insurance and Farmers Exchanges have agreed to buy MetLife’s U.S. property and casualty business for $3.94 billion, the insurers said on Friday, after the COVID-19 pandemic made motor and home insurers more profitable."

• Any ideas on why this is happening?
• What is the motivation?
• Are there significant changes to come?

 

[mplsmm]

I guess it leapfrog them into states where they have no presence and they want to take advantage of group accounts. Who knows what it means for us?

 

[rousemark]

Zurich and Famers Agree to Buy Metlife.

"Zurich Insurance and Farmers Exchanges have agreed to buy MetLife’s U.S. property and casualty business for $3.94 billion, the insurers said on Friday, after the COVID-19 pandemic made motor and home insurers more profitable."

• Any ideas on why this is happening?
• What is the motivation?
• Are there significant changes to come?

Answer to question one and two.. Because they see the potential for making a profit. Answer to question number 3... yes

 

[mplsmm]

Its definitely going to be a wait and see. There is little coming out.

 

[Ebbandflow]

Does anyone have any prior experience with having one of their independent carriers bought out by another?

Is it customary for the new company to keep paying commissions on the business, as well as appoint the agents?

 

[thomasm]

Has Metlife Home & Auto ever been competitive? I thought they were a little on the high side in Nebraska.

 

[Markthebroker]

Does anyone have any prior experience with having one of their independent carriers bought out by another?

Is it customary for the new company to keep paying commissions on the business, as well as appoint the agents?

I have seen many many times where one independent carrier buys another. Commissions keep getting paid, but usually the company that was purchased either stops writing new business completely, or it's at least throttled down aggressively. Existing policies are grandfathered in and usually keep renewing for some time. But, sometimes they are all cancelled and some or all rewritten.

Now, Farmers is a captive carrier, and I am guessing (I don't know) that MetLife is substantially larger than most of what I have personally firsthand witnessed, so these are two components I have no direct experience with. From what I have seen, though, if you have been writing with MetLife, you would be well advised to buckle your seatbelt my friend.

 

[Markthebroker]

Any ideas on why this is happening?

If I had to guess, I would say mostly to offset their losses and cancellations on the commercial end. With less driving and more people staying at home, the loss ratios on all home and auto have probably been looking great. The article also mentioned opening new distribution channels, but I am having trouble swallowing that.

What is the motivation?

$$$

Are there significant changes to come?

???

 

[Ebbandflow]

@Markthebroker Thank you for your feedback, it is very helpful. I actually am a MetLife agent so am a little concerned. I wouldn't be surprised if Farmer's opened it's product up to the independent agents, given that Nationwide did the same thing last year. It's possible the industry is trending in that direction.

 

[shawnmwalker]

Acquisitions happen all the time. and will continue. Tip #1: Select your partner carriers carefully.

Commissions will still be paid in almost all circumstances.

MTB (Mark the Broker) is right. Its either a roll the product into the platform or full throttle.

Consider why Allstate bought Nat Gen (Encompass and Allstate AI brands.....? What will happen there in 2021) and why Statefarm bought Gainsco (and for fun, Why Kemper Bought Infinity)....The captives are making a play for the IA channel....Does anyone remember Nationwide pulling out of the Captive channel THIS YEAR!

"Get the Net!" (Wayne's World Reference) Captives are investing in an IA play, investing in it, not killing it. Moving towards it, not away from it.