CUNA Mutual Group has reached an agreement to sell Producer’s Ag Insurance Group (ProAg), its crop insurance business, to HCC Insurance Holdings, Inc. (NYSE: HCC). The transaction, which is subject to regulatory approvals, is expected to close in the first quarter of 2015.
“This transaction allows our company to put even more focus on our core business lines serving consumers, credit unions, small plan advisors, and other core customer groups,” said Robert N. Trunzo, president and CEO, CUNA Mutual Group. “It also ensures America’s farmers can continue to count on ProAg for crop insurance coverage.”
CUNA Mutual Group assumed full ownership of ProAg in 2009. The crop insurance marketplace provided a key diversification opportunity during a time when the nation’s economy was fragile and the financial services industry was facing a number of challenges. Today, CUNA Mutual Group’s primary business lines show strong growth. Accordingly, this transaction will allow even greater strategic focus on these areas in line with CUNA Mutual Group’s long term strategic plans.
As consideration for the acquisition, HCC will pay CUNA Mutual Group $110 million in cash, to be adjusted at closing by a net worth adjustment amount described in the agreement between the companies.
ProAg has provided specialized crop protection products to America’s farmers since 1926. CUNA Mutual Group’s relationship with the Amarillo, Texas-based company began in 2006 as the lead reinsurer for ProAg and as a direct writer of crop insurance. In 2007, the company acquired a minority ownership of ProAg, and in 2009, became full owner.
Crop insurance protects farmers from financial losses resulting from natural causes such as drought, excessive moisture, hail, wind, frost, insects and disease.
Goldman Sachs & Co., acted as the financial advisor to CUNA Mutual Group in connection with the transaction and Sidley Austin LLP served as counsel to CUNA Mutual Group.