MADISON, Wis. — CUNA Mutual Group said it has reached an agreement to sell Producer's Ag Insurance Group — its crop insurance business better known as ProAg — to HCC Insurance Holdings, Inc.
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.
The transaction, which the two parties said is subject to regulatory approvals, is expected to close in Q1 2015.
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, CUNA Mutual acquired a minority ownership of ProAg. In 2009 it 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.
After CUNA Mutual Group assumed full ownership of ProAg in 2009, the crop insurance marketplace provided it 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. But with the economy improving, CUNA Mutual Group said its primary business lines now "show strong growth."
"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 Trunzo, president and CEO, CUNA Mutual Group. "It also ensures America's farmers can continue to count on ProAg for crop insurance coverage."
