Switzerland : Zurich to expand operations in North America by acquiring RCIS.
Zurich Insurance Group (Zurich) announced today that its subsidiary Zurich American Insurance Company (ZAIC) has entered into an agreement with Wells Fargo & Company (Wells Fargo) under which it will acquire 100 percent of Rural Community Insurance Agency, Inc. (RCIA) and its subsidiary Rural Community Insurance Company (RCIC). The two are collectively known as Rural Community Insurance Services (RCIS) a leading provider of agricultural insurance in the United States, recording approximately USD 2.1 billion in gross written premiums in 2014.
Zurich will pay Wells Fargo approximately USD 675 million plus the amount of excess capital in RCIS at the date of closing, estimated to be up to around USD 375 million. The transaction value of around USD 675 million represents deployment of part of the group's USD 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 continues to prioritize investments in distinctive positions, investing in the businesses and customer segments where we see the best opportunities for profitable growth. The expansion of commercial lines capabilities is one of our strategic priorities. In the U.S., the worlds largest market for commercial insurance, we are a top five player, with around a five percent market share. We are delighted to expand our activities in the crop insurance market, commented Kristof Terryn, Chief Executive Officer of Zurichs General Insurance business. The acquisition of RCIS will increase risk diversity of our General Insurance business by leveraging the crop exposure, which has low correlation to the rest of our book. This adds an exciting new chapter to Zurichs history of over 100 years in the U.S.
ZAIC began providing reinsurance to RCIS in 2000. It currently assumes 25 percent of RCIS ceded premiums through a quota share contract. RCIS offers federal crop insurance programs including multi-peril (MPCI) and other private crop insurance products. Since 1982 RCIS has helped reshape the privatized crop insurance business by offering a comprehensive line of insurance products and services to meet the unique requirements of producers, adding crops as new varieties emerge and developing new types of coverage when needed. With a national network of over 4,000 agents, RCIS conducts business in all 50 U.S. states, providing risk management for more than 130 crops on over 90 million acres. The company is a member of National Crop Insurance Services and the Crop Insurance and Reinsurance Bureau, Inc.
Mike Foley, CEO North America Commercial and Regional Chairman of North America said: Working in an industry with a high exposure to weather conditions, most farmers wouldn't think of operating without some form of crop insurance. These products and services help America's agricultural producers to stay competitive and be more innovative, as well as to have the financial security to stay in business and go on to plant the next season. RCIS has a national distribution footprint with highly tenured agents and an outstanding service reputation, insuring one in six farmers in the U.S. This acquisition illustrates how financial discipline allows us to capitalize on market opportunities that meet our strategic objectives.
Subject to applicable antitrust and insurance regulatory approvals as well as other customary closing conditions, the closing is expected to take place no later than the first quarter of 2016 with the business fully integrated into Zurich in 2017.
[c] 2015 Al Bawaba (Albawaba.com) Provided by SyndiGate Media Inc. ( Syndigate.info ).
|Printer friendly Cite/link Email Feedback|
|Date:||Dec 19, 2015|
|Previous Article:||Switzerland : Expert group identifies emerging demands of 5G to fuel ITU standardization.|
|Next Article:||Switzerland : Zurich proposes Jeffrey L. Hayman and David Nish for election to the Board of Directors.|