Leading players in the crop insurance industry are changing following a series of major mergers and acquisitions over the past 12 months, as outlined below.
Aspen Insurance Buys AgriLogic
Aspen Insurance Holdings Limited announced on January 20 that it acquired AgriLogic Insurance Services, LLC and certain affiliates. Kansas based AgriLogic, with 2015 estimated gross written premiums of $185 million, is a specialist U.S. crop business.
The value of the cash transaction was not disclosed. The move reflects Aspen’s stated goal of diversifying its portfolio of specialty insurance business.
Silveus Insurance Group Buys Cargill Unit
In the closing days of 2015, Cargill Inc. agreed to sell its crop insurance unit to Silveus Insurance Group, one of the largest crop insurance agencies in the United States. Privately owned Cargill had $120 billion in 2015 sales, derived from food, agriculture, financial and industrial products sold globally. Terms of the transaction, which closed this month, were not disclosed.
Zurich Buys RCIS from Wells Fargo
Rural Community Insurance Services (RCIS), a leading U.S. agricultural crop insurer, is being sold by Wells Fargo Insurance. Zurich Insurance Group AG agreed to acquire RCIS in December for a sales price estimated to be between $675 million and $1.05 billion. The transaction is expected to close in the first quarter of 2016.
RCIS offers risk management in all 50 states for more than 130 crops, according to company reports. It maintains a national network of more than 4,000 agents. Federal crop insurance programs offered by RCIS include multi-peril and other private crop insurance products. The company writes approximately $2 billion in insurance premiums annually, according to The Wall Street Journal.
AM Best reports that RCIS is expected to receive approximately 50% reinsurance support from Zurich American Insurance Company (ZAIC) when the transaction closes. Zurich is also expected to replace all third-party reinsurance by July 2016.
Deere Exits Crop Insurance in 2015
Deere & Company completed the sale of its crop insurance business to Farmers Mutual Hail Insurance Company of Iowa on March 31, 2015. Both John Deere Insurance Company, with $432 million in estimated gross written premiums, and John Deere Risk Protection, Inc. were included in the transaction. Terms of the deal were not disclosed.
Background on the Crop Insurance Industry
The Federal Crop Insurance Act of 1980 expanded the crop insurance program to include more crops and regions of the country.
A number of legislative changes have been made since 1980. In the 2014 Farm Act, for example, the federal crop insurance program was expanded when Congress authorized additional policies and allowed for potential new products, among a number of other changes.
The Congressional Budget Office reports that eight percent of outlays under the 2014 Farm Act will be used to fund crop insurance programs.
About The Author
Bill Hager is an insurance and reinsurance expert and arbitrator. He is President of Insurance Metrics Corp. and also an elected member of the Florida House of Representatives, where he serves on the Insurance and other committees.
Mr. Hager is a former Insurance Commissioner for the State of Iowa, and former President of NCCI, Inc., the nation’s largest workers’ compensation rate corporation.
As a regulator for eight years in five positions ((i) Assistant Attorney General assigned to the Department of Insurance, (ii) First Deputy Commissioner of Insurance, (iii) Iowa Commissioner of Insurance, (iv) Administrative Law Judge, and (v) Executive and Member of the National Association of Insurance Commissioners), Mr. Hager, along with his staff, approved (or disapproved) of the language of most all insurance policies used by each of the 1,500 insurance companies doing business in the state. This regulatory action also included the approval of policy application forms.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.