Zurich buys Wells Fargo crop insurance business

Zurich Insurance’s subsidiary, Zurich American Insurance, has agreed to buy crop insurance business Rural Community Insurance Agency and its subsidiary from Wells Fargo for up to $1.05bn (£700m).

The crop business had around $2.1bn in gross written premiums in 2014.

“The acquisition of RCIS will increase risk diversity of our General Insurance business by leveraging the crop exposure, which has low correlation to the rest of our book. This adds an exciting new chapter to Zurich’s history of over 100 years in the US,” said Kristof Terryn, chief executive officer of Zurich’s general insurance business.

Zurich will pay Wells Fargo around $675m plus the amount of excess capital in RCIS at the date of closing, estimated to be up to around $375m.

The transaction value of around $675m represents deployment of part of the group's $3bn excess capital, which, as Zurich has previously stated, will be invested in the business or returned to investors by the end of 2016.

The deal, which is subject to applicable antitrust and insurance regulatory approvals, is expected to take place by the first quarter of 2016 with the business fully integrated into Zurich in 2017.

At 1030 GMT, Zurich Insurance shares were up 0.2% to CHF251.50