Zurich Insurance Group AG agreed to buy a Wells Fargo & Co. crop-insurance business for as much as $1.05 billion as the Swiss company puts to work excess cash left over from a separate takeover bid that it abandoned this year.
The purchase or Rural Community Insurance Services, or RCIS, will give Zurich a 20 percent share of a highly regulated market guarding farmers against weather-related losses, Vontobel analyst Stefan Schuermann wrote in a note after the deal was announced Friday. It will provide about $1.6 billion in net earned premiums by 2017, adding 3.5 percent to Zurich’s top line, he wrote.
Zurich joins HCC Insurance Holdings Inc. and Maurice “Hank” Greenberg’s Starr Cos. in expanding into crop coverage to bet on long-term growth in food demand and benefit from government subsidies that help absorb losses. HCC agreed last year to buy Producers Ag Insurance Group from CUNA Mutual Group, while Farmers Mutual Hail Insurance Co. of Iowa reached a deal to buy Deere & Co.’s crop-insurance unit…Read more at Bloomberg