Earlier this week, Validus Holdings, Ltd. announced that it had reached an agreement with a Decatur, Illinois-based primary crop insurance general agent.
Through the transaction, Validus will acquire Archer Daniels Midland Company’s (ADM) Crop Risk Services (CRS). It will include a marketing services agreement under which both companies will cooperate to continue offering insurance, farm products, and services to CRS’s customers.
CRS had $548.9 million gross premiums written for the 2016 reinsurance year. The unit currently has 1,170 agents across 36 states. Following the acquisition, Validus intends to have CRS operate as part of the Western World Insurance Group.
Under the terms of the transaction, ADM will receive $127.5 million in cash, subject to certain working capital and balance sheet adjustments, in exchange for the entirety of its outstanding stock in CRS. Validus plans to use cash on hand to fund the transaction which is expected to close during the second quarter of this year, subject to obtaining required regulatory approvals and the satisfaction of other customary closing conditions.
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“I’m very pleased to welcome CRS to Validus,” said Validus chairman and CEO Ed Noonan.
“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’s existing agriculture book and participation in this market is a logical step as Validus continues to expand our presence in US primary specialty lines.”
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