trending Market Intelligence /marketintelligence/en/news-insights/trending/Ti3TdNmkahLfodpYwpTFvg2 content
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

Thank you for your interest in S&P Global Market Intelligence! We noticed you've identified yourself as a student. Through existing partnerships with academic institutions around the globe, it's likely you already have access to our resources. Please contact your professors, library, or administrative staff to receive your student login.

At this time we are unable to offer free trials or product demonstrations directly to students. If you discover that our solutions are not available to you, we encourage you to advocate at your university for a best-in-class learning experience that will help you long after you've completed your degree. We apologize for any inconvenience this may cause.

In This List

Validus in $127.5M crop MGA deal that will boost its US primary specialty biz

Part Two IFRS 9 Blog Series: The Need to Upgrade Analytical Tools

2018 US Property Casualty Insurance Market Report

Fintech

Fintech Funding Flows To Insurtech In February

Lemonade Growing Premiums Faster Than Esurance's Homeowners Business Did


Validus in $127.5M crop MGA deal that will boost its US primary specialty biz

Validus Holdings Ltd. stands to materially increase its U.S. primary specialty lines business with the Jan. 30 announcement of an agreement to acquire the crop risk services business of agricultural processor Archer Daniels Midland Co.

A wholly owned subsidiary of ADM's Agrinational Insurance Co., ADM Crop Services Inc. is a managing general agency that markets crop-hail and multiperil crop policies and produced $548.9 million in gross premiums written during the 2016 reinsurance year, of which 86% came from multiperil crop business and 14% from private crop products.

The $127.5 million acquisition, expected to close in the second quarter, would mark Validus' second purchase in the crop space in the past four years.

Validus maintained what Chairman and CEO Edward Noonan described in 2012 as a "very small" crop excess-of-loss reinsurance book prior to its agreement in 2013 to purchase Longhorn Re, which maintained a $55 million crop book. Noonan said at the time that he found the crop business attractive given its low correlation with natural catastrophe risk.

In a slide deck discussing the Jan. 30 announcement, Validus listed low correlation with other P&C lines among the various benefits of the transaction. Agriculture business would increase to account for about 25% of Validus' pro forma gross premiums written, up from 9% based on business volume for the trailing-12-month period ended Sept. 30, 2016. Insurance would account for 53% of Validus' business on a pro forma basis, up from 44%.

In conjunction with the acquisition, the buyer and seller struck a seven-year marketing services agreement through which customers may access crop insurance products and ADM's grain marketing services. ADM will retain the risk-bearing entities, including Agrinational.

The insurer is one of 16 individual entities designated by the U.S. Department of Agriculture to provide coverage through the Federal Crop Insurance Corp.'s standard reinsurance agreement for the 2017 crop year. The list of carriers also includes Chubb Ltd.'s ACE American Insurance Co., Endurance Specialty Holdings Ltd.'s American Agri-Business Insurance Co., American Agricultural Insurance Co., CGB Insurance Co., COUNTRY Mutual Insurance Co., Farmers Mutual Hail Insurance Co. of Iowa, American Financial Group Inc.'s Great American Insurance Co., Fairfax Financial Holdings Ltd.'s Hudson Insurance Co., QBE Insurance Group Ltd.'s NAU Country Insurance Co., Tokio Marine Holdings Inc.'s Producers Agriculture Insurance Co., Zurich Insurance Group Ltd.'s Rural Community Insurance Co., AmTrust Financial Services Inc.'s Technology Insurance Co. Inc., Swiss Re Ltd.'s Westport Insurance Corp. and XL Group Ltd's XL Reinsurance America Inc.

Aspen Insurance Holdings Ltd. unit Aspen American Insurance Co. was the lone new entrant to the department's list of carriers by virtue of its January 2016 acquisition of the MGA from the parent of Occidental Fire & Casualty Co. of North Carolina, which had been included on the previous list.

Everest Re Group Ltd.'s Everest Reinsurance Co. appeared on the 2016 list but not the 2017 version as it sold crop MGA Heartland Crop Insurance Inc. to CGB Insurance's parent. A related strategic reinsurance partnership was intended to provide Everest Re with access to a broader, more diversified crop insurance book.

Validus expects to operate the acquired business as part of Western World Insurance Group Inc., which it bought in October 2014. Stratford Insurance Co. would become the standard reinsurance agreement holder and approved insurance provider, subject to necessary approvals.

The transaction marks the latest shakeup in a crop insurance business in which some of the largest market participants have experienced ownership changes, highlighted by Zurich's March 2016 purchase of Rural Community.