The acquisition will establish MetLife as a Top Three Vision Care Insurer
September, which happens to be Life Insurance Awareness Month, has been busy for one of the country’s oldest and largest Life and Property & Casualty insurers. On September 17, 2020, New York-based MetLife, Inc. announced that it had entered into a definitive agreement to acquire Versant Health in all-cash deal valued at $1.675 billion. The deal is slated to close in the fourth quarter of 2020, assuming all of the customary closing conditions and regulatory approvals are met.
“This transaction furthers our goal of deploying capital to the highest-value opportunities,” said MetLife President and CEO Michel Khalaf. “We are pleased to welcome Versant Health, a well-run and well-respected leader in vision care, to the MetLife family. In Versant, we have found the right strategic fit with our group benefits business. We expect this combination to accelerate revenue growth while delivering greater value for our customers and shareholders.”
MetLife estimates that more than 90 percent of employees in the U.S. workforce are “interested in receiving vision insurance through their employer.” As a result of the acquisition, MetLife will have access to the approximately 35 million members of Versant Health essentially transforming the insurer into the nations third-largest vision care insurer.
“We are confident this acquisition will make our market-leading group benefits business even more attractive,” said Ramy Tadros, President of U.S. Business for MetLife. “The addition of the strong Davis Vision and Superior Vision brands will immediately establish MetLife as a leader in managed vision care. We look forward to offering our customers the exceptional member experiences that Versant provides.”
Reports suggest MetLife may also be selling its P&C business
On the heels of its Versant Health acquisition, MetLife also made intimations during a recent analyst conference this month that it is contemplating a sale of its property & casualty business. According to various publications, MetLife has initiated “a formal bid process for its P&C business” deeming it “noncore.” The reports say that analysts peg a potential price tag for this business at between $3 and $4 billion.
All of the reports stressed that there has been no official announcement nor official confirmation by MetLife as to the sale of this business.
The sale could create new top three U.S. P&C insurer
If, however, a potential sale of MetLife’s P&C business does occur, it could very well transform the U.S. Property & Casualty insurance marketplace by creating a new top three P&C insurer to supplant Progressive from that spot. According to our latest NAIC Market Share Reports, MetLife is the 18th largest Private Passenger Auto Insurer in the U.S. with $2,467,219,347 in Direct Written Premiums in 2019 representing a 0.97% market share. It is also one of the Top 25 largest homeowners’ insurer in the U.S. ranking number 14th on our 2020 list with $1,112,254,566 in Direct Written Premiums representing a 1.07% market share.
Boston-based Liberty Mutual and Hartford-based Travelers already have expressed an interest in acquiring MetLife’s business, and with good reason. Liberty Mutual is currently the fourth-largest P&C insurer in the U.S. with $35,600,051,448 in Direct Written Premiums and a 5.03% market share while Travelers is the sixth-largest insurer with $28,016,965,959 in DWP and a 3.96% market share. In comparison, Progressive is the third-largest insurer with $39,222,879,284 and a 5.54 market share.
As a result, a purchase of MetLife’s P&C business by either of these insurers would easily increase that insurers market share and in the case of Liberty Mutual, likely propel the insurer into the top three largest-writer P&C writers in the country.
A potential sale is in line with MetLife’s “Next Horizon Strategy”
As noted above, MetLife”s P&C business has been deemed “noncore” by various analysts who follow the company. This comment also underscores MetLife’s own “New Horizon Strategy” as espoused by CEO Michel Khalaf in comments made last week:
“And as a reminder we wanted a simple strategy that is focused on three pillars, focus, simplify, and differentiate. And at the core, this is about basing every decision that we make on three, you know, questions that we ask ourselves. The first one is, does this decision help accelerate our focus or strengthen our focus on value creation? Does it simplify the company and enhance the customer experience? And does it differentiate us vis-à-vis the competition?”