We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
MetLife (MET) to Sell Auto & Home Units to Streamline Business
Read MoreHide Full Article
MetLife, Inc. (MET - Free Report) has entered into a definitive agreement to sell Metropolitan Property and Casualty Insurance Company and certain wholly owned subsidiaries to Farmers Group, Inc. a subsidiary of Zurich Insurance Group. The deal valued at $3.94 billion is likely to close in the second quarter of 2021.
With this transaction, MetLife and the Farmers Exchanges forged a 10-year strategic partnership. Per the pact, Farmers Insurance will offer its personal lines products on MetLife’s industry-leading U.S. Group Benefits platform. Notably, MetLife provides more than 35 group products and services via its U.S. Group Benefits segment.
Farmers will market MetLife’s products via the latter’s vast network of 7,700 agents and assume responsibility for the company’s existing retail property and casualty customers.
MetLife’s property & casualty business offers personal lines of property and casualty insurance including private passenger automobile, and homeowners’ and personal excess liability insurance in the United States. The company’s strategy is to exit this fiercely competitive business and expand into life and health insurance and other benefits offerings, for which it is widely known.
Its property/casualty auto and home insurance business generated average operating earnings of 13% from 2015 to 2019. Its combined ratio was 97% over this time period. Notably, a combined ratio of less than 100% signifies underwriting profitability.
However, operating earnings for this unit declined to $249 million in 2019 from $344 million in 2018. This unit faces significant competition from other niche players, such as The Travelers Companies, Inc. (TRV - Free Report) , Hartford, The Allstate Corp. (ALL - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) .
In the third quarter of 2020, P&C adjusted earnings were down 68% from the prior-year period due to unfavorable underwriting margins as a result of higher catastrophe losses. The overall combined ratio was 104.2%, above the company’s annual target range of 92-97% and the prior-year quarter of 98.4%. This business suffered the highest quarterly cat loss in nearly a decade.
The company’s recent moves also reflect its intent to streamline its business by focusing on high-growth areas, such as the health and benefits business. To this end, it recently announced that it will acquire the vision care company Versant Health for $1.675 billion in an all-cash transaction. Versant Health owns the brands Davis Vision and Superior Vision.
In January this year, it acquired PetFirst, which gave it an entry into the growing pet insurance market.
Also, in October 2020, the company sold its wholly-owned subsidiary MetLife Seguros de Retiro S.A. Additionally, in June 2020, the company divested two of its wholly-owned subsidiaries, namely MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”).
During the third quarter, the company booked the sale of its annuity business in Argentina, which was no longer the right fit for its portfolio. With no material impact on MetLife, this divestment helps illustrate its ongoing process of planting and pruning in a bid to achieve the optimal business mix.
These deals come across as much anticipated as the company’s CEO Khalaf in September said that the company is looking for strategic-fit businesses and prudent capital deployment to those operations that achieve or exceed a minimum risk adjusted hurdle rate.
Business streamlining will provide efficiency to the company at a time when its top line is already under pressure. The company’s revenues declined 7.7% year over year in the first nine months of 2020. Also net investment income plunged 16.5% year over year in the same period. The low interest rate environment (which is expected to continue through 2023) might exert further weigh on net investment income because of weak investment yields.
In six months’ time, the stock has gained 30% compared with the industry’s growth of 21.4%.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
MetLife (MET) to Sell Auto & Home Units to Streamline Business
MetLife, Inc. (MET - Free Report) has entered into a definitive agreement to sell Metropolitan Property and Casualty Insurance Company and certain wholly owned subsidiaries to Farmers Group, Inc. a subsidiary of Zurich Insurance Group. The deal valued at $3.94 billion is likely to close in the second quarter of 2021.
With this transaction, MetLife and the Farmers Exchanges forged a 10-year strategic partnership. Per the pact, Farmers Insurance will offer its personal lines products on MetLife’s industry-leading U.S. Group Benefits platform. Notably, MetLife provides more than 35 group products and services via its U.S. Group Benefits segment.
Farmers will market MetLife’s products via the latter’s vast network of 7,700 agents and assume responsibility for the company’s existing retail property and casualty customers.
MetLife’s property & casualty business offers personal lines of property and casualty insurance including private passenger automobile, and homeowners’ and personal excess liability insurance in the United States.
The company’s strategy is to exit this fiercely competitive business and expand into life and health insurance and other benefits offerings, for which it is widely known.
Its property/casualty auto and home insurance business generated average operating earnings of 13% from 2015 to 2019. Its combined ratio was 97% over this time period. Notably, a combined ratio of less than 100% signifies underwriting profitability.
However, operating earnings for this unit declined to $249 million in 2019 from $344 million in 2018. This unit faces significant competition from other niche players, such as The Travelers Companies, Inc. (TRV - Free Report) , Hartford, The Allstate Corp. (ALL - Free Report) and Berkshire Hathaway Inc. (BRK.B - Free Report) .
In the third quarter of 2020, P&C adjusted earnings were down 68% from the prior-year period due to unfavorable underwriting margins as a result of higher catastrophe losses. The overall combined ratio was 104.2%, above the company’s annual target range of 92-97% and the prior-year quarter of 98.4%. This business suffered the highest quarterly cat loss in nearly a decade.
The company’s recent moves also reflect its intent to streamline its business by focusing on high-growth areas, such as the health and benefits business. To this end, it recently announced that it will acquire the vision care company Versant Health for $1.675 billion in an all-cash transaction. Versant Health owns the brands Davis Vision and Superior Vision.
In January this year, it acquired PetFirst, which gave it an entry into the growing pet insurance market.
Also, in October 2020, the company sold its wholly-owned subsidiary MetLife Seguros de Retiro S.A. Additionally, in June 2020, the company divested two of its wholly-owned subsidiaries, namely MetLife Limited and Metropolitan Life Insurance Company of Hong Kong Limited (collectively, “MetLife Hong Kong”).
During the third quarter, the company booked the sale of its annuity business in Argentina, which was no longer the right fit for its portfolio. With no material impact on MetLife, this divestment helps illustrate its ongoing process of planting and pruning in a bid to achieve the optimal business mix.
These deals come across as much anticipated as the company’s CEO Khalaf in September said that the company is looking for strategic-fit businesses and prudent capital deployment to those operations that achieve or exceed a minimum risk adjusted hurdle rate.
Business streamlining will provide efficiency to the company at a time when its top line is already under pressure. The company’s revenues declined 7.7% year over year in the first nine months of 2020. Also net investment income plunged 16.5% year over year in the same period. The low interest rate environment (which is expected to continue through 2023) might exert further weigh on net investment income because of weak investment yields.
In six months’ time, the stock has gained 30% compared with the industry’s growth of 21.4%.
MetLife carries a Zacks Rank #3 (Hold), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>