The marketfor multiperil crop insurance may be due for another shakeup as said July 25 thatit entered a letter ofintent to sell a managinggeneral agency it acquiredin 2011.
EverestRe intends to sell Heartland CropInsurance Inc. to CGB Diversified Services Inc., a unit of agriculturalproducts and services provider CGBEnterprises Inc., and enter a long-term agreement to provide quota-sharereinsurance capacity on the acquirer's combined book of crop insurance business.CGB Enterprises offers various products and services to the grain and transportationindustries.
, whichHeartland Crop references in various product filings as its policy writing company,reported $209.1 million in multiperil crop and $39.8 million in private crop directpremiums written in 2015. CGB InsuranceCo. generated direct premiums written of $556 million in multiperilcrop and $62.2 million in private crop during 2015.
S&PGlobal Market Intelligence rankedCGB Insurance as the nation's No. 7 writer of multiperil crop direct premiums written;Everest Re placed 11th.
was the No. 1 multiperilcrop writer at the group level in 2015 on a pro forma basis, reflecting businesswritten by subsidiaries of the former ACE Ltd. The acquisition of Chubb Corp. byACE closed in January2016. Zurich Insurance Group Ltd.ranked a close second on a pro forma basis, owing to its March acquisition of Rural Community Insurance Co.
Thatwas one of a host of M&Atransactions that have impacted the market-share rankings in recent years, includingdeals involving HCC Insurance Holdings as a buyer and a seller,as well as Farmers Mutual Hail InsuranceCo. of Iowa as an acquirer.
CGB DiversifiedServices had written cropinsurance business on the paper of third-party carriers Austin Mutual Insurance Co. and GuideOne Mutual Group, prior to its December 2013 of United NationalCasualty Insurance Co. as essentially a clean shell.
RenamedCGB Insurance, the company generated $420.4 million in multiperil crop direct premiumswritten in 2014, up from zero in 2013. CGB Diversified Services accounted for $617.3million of the $618.2 million in total-filed direct premiums written reported byCGB Insurance in 2015.
The structureof the proposed transaction would provide Everest Re with a "much broader,more diversified" book of crop business, John Doucette, president and CEO ofthe company's reinsurance operation, said in a release.
"Theopportunity to grow and diversify in the crop insurance business at a much morerapid pace and with economies of scale is an extremely attractive alternative,"added Everest Re President and CEO Dominic Addesso.
For CGBDiversified Services, the company said the proposed deal would allow it to growits footprint, product set and market share in a number of states.
CGB Insurancereported zero net premiums written or earned in 2015 as it ceded all $662.1 millionin gross premiums written to reinsurers. Of that amount, according to disclosuresin its annual statement,the company ceded $415.4 million to the FederalCrop Insurance Corp., $73.3 million to Partner Reinsurance Co. of the U.S., $57.5 million to a unitof Validus Holdings Ltd.,$34.6 million to a unit of AlliedWorld Assurance Co. Holdings AG and $23.3 million to an subsidiary.
Throughthe time of Heartland's sale to Everest Re in a deal valued at $55 million in cashplus a $13.5 million earnout, the MGA wrote multiperil crop and crop-hail businessthrough fronting carrier GreenwichInsurance Co., a unit of XLGroup Plc. Greenwich Insurance's multiperil crop directpremiums written plunged to $4.9 million in 2012 from $289.5 million in 2011 beforebouncing back in subsequent years as XL acquired crop insurance MGA Global Ag Insurance ServicesLLC.
EverestNational's multiperil crop business volume soared to $275.7 million in 2012 from$47.3 million in 2011 and zero in 2010, reflecting the impact of the Heartland purchase.