American Financial Group to Acquire Crop Risk Services From AIG for $240M

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American Financial Group Inc. and American International Group announced they have entered into a definitive agreement whereby AFG will purchase Crop Risk Services (CRS) from AIG.

Under the terms of the transaction, AFG will pay AIG $240 million in cash at closing, subject to certain closing adjustments. AFG expects to use cash on hand to fund the acquisition and the parties anticipate the closing to take place during the third quarter of 2023, subject to obtaining required regulatory approvals and the satisfaction of other customary closing conditions.

CRS is a primary crop insurance general agent based in Decatur, Ill., with 2022 gross written premiums of approximately $1.2 billion and is the seventh largest provider of multi-peril crop insurance in the United States, based on 2022 premiums.

“We are very pleased to welcome CRS and its approximately 450 employees to AFG’s Great American Insurance Group,” commented Carl H. Lindner III, co-chief executive officer of Cincinnati-headquartered AFG, in a statement.

“This business is a great strategic fit with our existing crop insurance operations and will provide the opportunity to continue to benefit from economies of scale. Following the transaction, Great American will remain the No. 5-ranked writer of U.S. crop insurance and the largest U.S.-owned participant in the United States multi-peril crop insurance program,” Lindner added.

“This is a wonderful example of our ability to execute a transaction quickly and deploy excess capital into AFG’s core businesses as we identify potential to expand our specialty niche businesses through acquisitions that meet our target return thresholds,” said S. Craig Lindner, co-chief executive officer of AFG. “Following the transaction, AFG expects to have significant excess capital available for additional share repurchases or special dividends.”

Peter Zaffino, chairman and chief executive officer of AIG, commented, “AIG acquired CRS as part of its acquisition of Validus Holdings, Ltd. Since that time, CRS has grown substantially under the leadership of a talented and experienced management team. AFG will be an excellent partner for CRS and the business will benefit from the scale this transaction provides. We look forward to a seamless transition through the closing and wish AFG and the entire CRS team every success in the future.”

American Financial Group’s Great American Insurance Group has been providing crop-hail coverage since 1915 and began writing multi-peril crop insurance in 1980 after Congress authorized the program. Great American’s Crop Division generated gross written premiums of approximately $1.8 billion in 2022 and is the fifth largest provider of multi-peril crop insurance in the United States. As part of the AFG organization, CRS will continue to do business in all 37 states in which it currently operates.

Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel for AFG. Evercore Group L.L.C. and Sidley Austin LLP acted as financial advisor and legal counsel, respectively, for AIG.

Source: American Financial Group

Mergers & Acquisitions

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