Bermuda headquartered insurance and reinsurance group Validus has acquired the U.S. Crop Risk Services business from Archer Daniels Midland Company for a total consideration of $127.5 million.
The deal will see the Bermudian re/insurance group and ADM continue to collaborate, under a marketing services agreement through which they will provide a full range of insurance and farm products and services to Crop Risk Services (CRS) customers.
CRS is a primary crop insurance general agent located in Decatur, Illinois with 1,170 agents across 36 states. The company generated $548.9 million of gross premiums underwritten for the 2016 reinsurance year.
The acquisition will build-out Validus’ crop insurance operations significantly, adding diversification to the re/insurers book and also providing opportunities to share some of the risk through its reinsurance book as well.
Ed Noonan, Validus’ Chairman and Chief Executive Officer, commented; “I’m very pleased to welcome CRS to Validus. CRS is a high quality crop insurance provider that has achieved excellent growth in recent years. Validus will benefit from CRS’s commitment to provide superior customer service to agents and farmers via their leading technology capabilities. The addition of CRS complements Validus’ existing agriculture book and participation in this market is a logical step as Validus continues to expand our presence in U.S. primary specialty lines. We are excited by the long–term partnership with ADM as this transaction further provides the unique opportunity of a marketing services agreement with one of the largest agricultural processors in the world.”
Joe Taets, President of ADM’s Agricultural Services Business Unit, added; “We’re pleased to have reached an agreement that includes a marketing services agreement that will allow ADM and Validus to work together to continue to offer customers a full array of crop insurance products as well as ADM’s grain marketing services. We are pleased to have found a buyer in Validus that is committed to running—and growing—the business, and we look forward to continuing to work with Validus and the CRS sales team and their customers across the country.”
Validus will position the CRS business as part of its primary arm Western World Insurance Group. The $127.5 million will acquire 100% of CRS’ shares and Validus intends to use cash on hand to fund the deal. The acquisition is expected to close in the second quarter of 2017, subject to regulatory approvals and customary closing conditions.
