XL Reinsurance America Inc. – a subsidiary of XL Group plc (XL), completed the previously announced acquisition of the crop insurance provider, Global Ag Insurance Services for an undisclosed amount. Global Ag is based in the western United States.
XL Group and Global Ag partnered in 2011 and offered crop insurance products and services to western specialty crop producers and growers through the USDA multi-peril crop insurance program. Conventional crop insurance solutions and risk management did not suffice the needs of producers in the region. As a result, the two companies designed an alternative specialized platform to meet the requirements of growers and agents in the western United States. It is worth noting that Global Ag has witnessed robust growth in the western region owing to its well-established position among crop producers therein.
On the other hand, XL Group has been involved in the crop insurance business for more than 10 years now. With this acquisition, XL Group is looking forward to capitalize on the expertise of Global Ag in the western U.S. Moreover, having already worked together successfully through the partnership tenure, XL Group is confident of accomplishing further on the back of this acquisition.
XL Group’s sturdy financial situation is expected to support the transaction for the acquisition. The company exited the fourth quarter of 2013 with solid cash balance of $1.8 billion.
Other property and casualty insurers are also adopting the same path to ramp up its inorganic growth profile. In Dec 2013, a wholly-owned subsidiary of White Mountains Insurance Group Ltd. (WTM) announced that it will take over Star & Shield Risk Management LLC for an undisclosed amount.
In Nov 2013, The Travelers Companies, Inc. (TRV) closed its acquisition of Dominion of Canada General Insurance.
Also, in Jan 2014, ACE Limited (ACE) and its local partners inked a deal to acquire a 60.9% stake in The Siam Commercial Samaggi Insurance PCL – a general insurance company in Thailand, from Siam Commercial Bank.
XL Group presently carries a Zacks Rank #3 (Hold).