Zurich acquires crop insurer RCIS

Zurich American Insurance Company (ZAIC), a subsidiary of Zurich Insurance Group, has entered into an agreement with Wells Fargo & Company 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), one of the nation’s largest crop insurance providers, recording approximately USD2.1 billion in gross written premiums in 2014. The acquisition expands and diversifies Zurich’s portfolio of commercial insurance products and services in North America.

Zurich began its relationship with RCIS in 1992 and currently assumes 25 percent of RCIS’ retained premiums through a quota share contract. This long-term working collaboration has provided Zurich with a deep understanding of the crop insurance industry, the exposures in the crop programme and RCIS as a business.

Zurich will pay Wells Fargo approximately USD675 million plus the amount of excess capital in RCIS at the date of closing, estimated to be up to USD375 million. The payment of approximately USD675 million represents deployment of part of the group’s USD3 billion excess capital, which, as Zurich has previously stated, will be invested in the business or returned to investors by the end of 2016.