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

[Markthebroker]

agree, but when buying a company, you have to make a bigger profit to recover the money invested

You are right, but the math could be a lot more convoluted than just making more than you paid for it.

It could be about offsetting losses, looking good in the short term for investors or board members, opening up new markets, etc. I'll give you a good example. Home Depot in my area bought out and immediately shut down their local competitor, Orchard Hardware and all their locations. Now, on paper, it looked like a massive loss. Big spending and nearly no return. However, now they only need to compete with Lowe's, Ace, and the internet, so the return, hopefully for them, will show up in a very different place that wouldn't be obvious on a simple balance sheet.

 

[Allen Trent]

You are right, but the math could be a lot more convoluted than just making more than you paid for it.

It could be about offsetting losses, looking good in the short term for investors or board members, opening up new markets, etc. I'll give you a good example. Home Depot in my area bought out and immediately shut down their local competitor, Orchard Hardware and all their locations. Now, on paper, it looked like a massive loss. Big spending and nearly no return. However, now they only need to compete with Lowe's, Ace, and the internet, so the return, hopefully for them, will show up in a very different place that wouldn't be obvious on a simple balance sheet.

Agree with that example for sure. That is why my earlier comment was that they must believe they can get some economies of scale to improve the expense ratios. Met life PC just doesn't appear to open new markets for Farmers like other acquisitions have

 

[todd02]

Because they are transitioning to a multi carrier platform under the Zurich Umbrella. Watch and see.

 

[Ins09]

Todd02-By multi-carrier, do you mean Farmers, the current Met platform, and Foremost? Or do you mean, they're going to allow Farmers agents to broker on price through a GA with companies like Travelers, Safeco, etc?

 

[marindependent]

The rumor on the street is that Metlife Auto & Home will now be called....Foremost.

 

[shawnmwalker]

I believe there could be some truth to that. ^

 

[tommwh]

Because they are transitioning to a multi carrier platform under the Zurich Umbrella. Watch and see.

Any update on this? Are they transitioning the existing farmers agencies to farmers and the metlife products or setting them up like how metlife was with other companies as well to write with?