Everest Re Group, a Bermuda-based property and casualty reinsurance and insurance firm, has acquired the business and operations of Kansas-based Heartland Crop Insurance, a managing general agent, for approximately $68.5m.
According to the Everest Re, it will pay $55m for the business plus the agreed upon value of the net assets of the agency, with an additional contingency of up to $13.5m based on future performance.
Heartland is a specialty underwriter of crop insurance that offers comprehensive multi peril crop and crop-hail insurance products through its distribution network, with estimated premium of $300m.
Everest said that it will seek to obtain the approval of the USDA Risk Management Agency (RMA) to operate as an approved insurance provider of this business under the Federal Crop Insurance Program for the 2012 crop season, which begins on 1 July 2011.
Until then, Everest will continue to participate in this business as a reinsurer. On both a direct and reinsurance basis, Everest expects to generate approximately $160m of premium from this book for 2011.
Everest Re chairman and CEO Joseph Taranto said that Heartland provides an opportunity to grow and diversify the insurance platform into a market that has very attractive underwriting dynamics.
"The acquisition represents a key strategic step towards building out our insurance business into shorter tail specialty lines and is expected to be accretive to earnings in the first year.
"With its highly experienced team, long-term relationships, and strong track record for performance, Heartland will be a valued addition to the Everest organization," Taranto said.