American Financial Group (AFG) has entered into an agreement to purchase primary crop insurance general agent Crop Risk Services (CRS) from AIG.
CRS is based in Decatur, Illinois, and is the seventh largest provider of multi-peril crop insurance in the United States, based on 2022 premiums.
Under the terms of the transaction, AFG will pay AIG $240 million in cash at closing, subject to certain closing adjustments.
AFG expects that it will use cash on hand to fund the acquisition.
Both parties anticipate the closing to take place during the third quarter of 2023, subject to obtaining the required regulatory approvals and the satisfaction of other customary closing conditions.
Carl H. Lindner III, Co-Chief Executive Officer of AFG, commented, “We are very pleased to welcome CRS and its approximately 450 employees to AFG’s Great American Insurance Group.
“This business is a great strategic fit with our existing crop insurance operations and will provide the opportunity to continue to benefit from economies of scale.
“Following the transaction, Great American will remain the #5 ranked writer of U.S. crop insurance and the largest U.S.-owned participant in the United States multi-peril crop insurance program.”
S. Craig Lindner, Co-Chief Executive Officer of AFG added, “This is a wonderful example of our ability to execute a transaction quickly and deploy excess capital into AFG’s core businesses as we identify potential to expand our specialty niche businesses through acquisitions that meet our target return thresholds.
“Following the transaction, AFG expects to have significant excess capital available for additional share repurchases or special dividends.”
Peter Zaffino, Chairman and Chief Executive Officer of AIG said, “AIG acquired CRS as part of its acquisition of Validus Holdings, Ltd. Since that time, CRS has grown substantially under the leadership of a talented and experienced management team.
“AFG will be an excellent partner for CRS and the business will benefit from the scale this transaction provides.
“We look forward to a seamless transition through the closing and wish AFG and the entire CRS team every success in the future.”
Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel for AFG. Evercore Group L.L.C. and Sidley Austin LLP acted as financial advisor and legal counsel, respectively, for AIG.
