The company will acquire RCIS for $1 billion

The Swiss company Zurich Insurance Group AG will pay $1.05 billion for the purchase of American agricultural insurance company at Wells Fargo & Co. Zurich will buy Rural Community Insurance Services (RCIS) for $675 million, plus additional capital on the closing date, which is now estimated at a maximum of $375 million. Wells Fargo announced an auction for RCIS with $2.1 billion gross premium subscription in 2014 after he suffered losses associated with extreme weather in recent years, analysts said. The purchase by the company of this Zurich business includes a share of $3 billion of free cash Swiss insurance company has undertaken to use for small acquisitions, and payments to investors. At the beginning of this year the company has given up its more ambitious proposals of the British company RSA Insurance Group Plc. The purchase of the RCIS will increase the range of risks General insurance business, strengthening the agricultural sector, which has a low correlation to the rest of the portfolio company, announced the company's management. RCIS insures every sixth American farmer was reported by Zurich, risk management providing a yield of more than 90 million acres. Despite the Zurich statement that the purchase business insurance will help diversify their own risks, analysts said that the American insurance company suffered losses associated with recent extreme weather. Over the past four years the profitability of the purchased business had average gross combined ratio of 102.2% and average loss of $26 million, analysts said DZ Bank AG. Partly this was because of unusually high damage to crops caused by the drought. This acquisition can be useful strategically, but given the recent results of the RCIS, it is expensive. A ratio above 100% means that the insurance company pays more than it receives. In addition to extreme weather, including drought and floods, low interest rates also contributed to the establishment of agricultural insurance companies, less attractive to banks. The agreement is expected to be completed at the end of the first quarter of 2016. Source - http://agro2b.ru