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Hamilton, Bermuda-based Everest Re Group, Ltd. has signed a letter of intent to sell its U.S. crop insurer, Heartland Crop Insurance Inc., to Jacksonville, Illinois-based CGB Diversified Services Inc.
The sale is contingent upon all customary closing provisions, including the finalization of the stock purchase agreement, and all required regulatory and board approvals, Everest Re said Monday in a statement.
Upon completion of the sale, Everest will enter into a strategic long-term reinsurance relationship with CGB Diversified, to provide quota share reinsurance capacity on the combined crop insurance portfolio of the Diversified-Heartland companies.
CGB Diversified Services Inc. offers a range of services including crop insurance, risk management, and grain marketing expertise to farmers across 38 states, Everest Re said, and with the acquisition of Topeka, Kansas-based Heartland, CGB will significantly increase its market share in a number of key states.
“We are excited to enter this strategic reinsurance partnership with CGB DS,” John Doucette, president and CEO of the Everest’s reinsurance operation said in a statement. “They are a well-respected crop insurance operation in the U.S. with strong market penetration. This alliance provides Everest access to a much broader, more diversified, crop insurance portfolio."
Dom Addesso, president and CEO of Everest Re Group, said “CGB DS presented us with a compelling strategic option. The opportunity to grow and diversify in the crop insurance business at a much more rapid pace and with economies of scale is an extremely attractive alternative.”
CGB Diversified is a wholly owned subsidiary of Mandeville, Louisiana-based CGB Enterprises Inc., a diversified business with focus on the commodity and transportation sectors. CGB operates nearly 100 grain facilities in the United States and has dedicated operations in stevedoring, logistical services, barge/rail/truck transportation, fertilizer, crop insurance, agri-finance, soybean processing, producer risk management, and other related businesses.
Analysts at Macquarie Research have suggested that high level of catastrophe losses in the second quarter of 2016 might be enough to force reinsurance pricing to bottom out at the January 2017 renewal season, Artemis.bm reported.