Zurich acquires crop insurance provider
Zurich American Insurance Company (ZAIC), a subsidiary of Zurich Insurance, has is set to acquire (RCIA) from Wells Fargo.
Zurich will also acquire RCIA’s subsidiary Rural Community Insurance Company (RCIC) as part of the transaction.
The two firms are collectively known as Rural Community Insurance Services (RCIS), one of the nation’s largest crop insurance providers, recording approximately $2.1 billion in gross written premiums in 2014.
RCIS offers federal crop insurance programmes including multi-peril and other private crop insurance products.
Zurich will pay Wells Fargo approximately $675 million plus the amount of excess capital in RCIS at the date of closing, estimated to be up to $375 million.
The payment represents deployment of part of the group’s $3 billion excess capital, which, as Zurich has previously stated, will be invested in the business or returned to investors by the end of 2016.
Zurich said it is continuing to prioritise investments in distinctive positions, investing in the businesses and customer segments where it sees the best opportunities for growth. The expansion of commercial lines capabilities is one of its strategic priorities.
The insurer began its relationship with RCIS in 1992 and currently assumes 25 percent of RCIS’ retained premiums through a quota share contract. Zurich said the long-term working collaboration has provided it with a deep understanding of the crop insurance industry, the exposures in the crop programme and RCIS as a business.
“Zurich has been a part of American business for more than 100 years, and that means we understand the importance of farmers and the agriculture industry to the American economy,” said Mike Foley, chief executive officer of North America commercial and regional chairman of North America.
“This acquisition adds an exciting new chapter to our long history in the US and illustrates how financial discipline allows us to capitalise on market opportunities that meet our strategic objectives.”
