What Will Happen to Crop Insurer RCIS Under New Ownership?

December 29, 2015 09:50 AM
 
What Will Happen to Crop Insurer RCIS Under New Ownership?

It's been a busy few months for big ag deals: John Deere and Precision Planting, Dow and DuPont, and most recently, the sale of Wells Fargo crop insurer RCIS to Zurich American Insurance Company.

Worth as much as $1.05 billion, the RCIS deal is expected to close in the first three months of 2016, pending regulatory approvals.

But unlike some of the other big deals in ag, the impact of the RCIS acquisition on farmers may be relatively muted, at least from the outside.

"We think of this as a bolt-on acquisition," said Mike Foley, CEO of Zurich North America Commercial and regional chairman for North America.  "We can bring RCIS on relatively as-is."

He does not expect any immediate "shifts in headcount."

In a separate statement, Mike Day, president of RCIS, conveyed much the same message.

"Since our policy issuing company, Rural Community Insurance Company (RCIC), is included in this sale, agents will not be required to transfer any existing customers," Day said. "Agents can continue to represent the RCIS brand using our innovative software solutions including the CIMax system, integrated mapping services, the CIQuote system, the RCIS Mobile application and others."    

According to Foley, the allure of the RCIS arose not from potential cost-cutting efficiencies, but the chance to further diversify Zurich's North American portfolio. Founded in 1872 in Switzerland, Zurich is one of the 5 largest commercial insurers in the U.S, providing everything from corporate liability insurance to earthquake and hurricane coverage. It has also provided reinsurance to RCIS since 2000.

After it finalizes the RCIS acquisition, Zurich's North American business will grow to nearly $16 billion in gross written premiums, with $2 billion coming from RCIS.

"We see this as a compelling line of business," Foley told AgWeb. "Clearly there are tremendous risks that farmers face ... and it's an area that we know and understand."

Like many firms, Zurich has been investing in big data, which Foley believes will offer fresh insights and opportunities for its various product lines, including crop insurance.

Is he worried about the viability of Zurich's new acquisition given the ongoing discussions about crop insurance programs on Capitol Hill?

"There's a real fundamental risk to growing crops, and it's a meaningful risk that needs to be managed in some way," Foley said. "I think farmers will always need this type of insurance. It's an integral part of their business."

 

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