Zurich American buys Rural Community

SCHAUMBURG - Zurich American Insurance Co., a subsidiary of Zurich Insurance Group, said Friday it has signed an agreement with Wells Fargo & Co. to acquire Rural Community Insurance Agency Inc. and its subsidiary Rural Community Insurance Co.

Zurich will pay Wells Fargo about $675 million plus the amount of excess capital in RCIS at the date of closing, which could be about $375 million.

Subject to applicable regulatory approvals, the closing is expected to be during the first quarter of 2016 with the business fully integrated into Zurich in 2017.

"Zurich has been a part of American business for more than 100 years, and that means we understand the importance of farmers and the agriculture industry to the American economy," said Mike Foley, CEO North America Commercial and regional chairman of North America. "This acquisition adds an exciting new chapter to our long history in the U.S. and illustrates how financial discipline allows us to capitalize on market opportunities that meet our strategic objectives."

The two companies are collectively known as Rural Community Insurance Services, one of the nation's largest crop insurance providers with about $2.1 billion in gross written premiums in 2014. The acquisition expands and diversifies Zurich's portfolio of commercial insurance products and services in North America.

Zurich began its relationship with RCIS in 1992 and currently assumes 25 percent of RCIS' retained premiums through a quota share contract. This long term working collaboration has provided Zurich with a deep understanding of the crop insurance industry, the exposures in the crop program and RCIS as a business.