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HCC Insurance Closes ProAg Buyout, Begins Crop Insurance - Analyst Blog

HCC Insurance Holdings Inc. ( HCC ) closed the buyout of Producers Ag Insurance Group, Inc. or ProAg from CUNA Mutual Group for $105 million in cash. The acquisition marks HCC Insurance's debut in crop insurance business.

The acquisition was announced in Sep 2014. Being an all-cash transaction, it also bears testimony to the solid liquidity of the buyer.

HCC Insurance has a diversified portfolio of specialty insurance businesses. It primarily underwrites non-correlated specialty insurance products. The addition of crop insurance to its portfolio by virtue of ProAg acquisition hence enriches its offerings. Crop insurance is also a non-correlated line of business.

On the other hand, headquartered in Amarillo, TX, ProAg writes multi-peril crop, crop hail, named peril and livestock insurance. The company, being the sixth largest writer of multi-peril crop insurance and crop hail insurance, had 5% market share in 2013. Its earned premiums grossed $633.5 million in 2013.

HCC Insurance always pursues strategic initiatives that drive its operational results. In May 2013, the company launched Construction Property Risks Division, expanding specialty focus by developing its underwriting capability in builders' risk insurance.

There was no earnings momentum over the last 60 days. With optimism over the current acquisition we expect the analysts to pull up their estimates exerting upward pressure over its Zacks Rank. HCC Insurance presently carries a Zacks Rank #3 (Hold).

Following the organic route to ramp up operational profile seems a well-accepted strategy among insurers as acquisitions rage the insurance space. Last month, ACE Limited ( ACE ) inked a deal to buy Fireman's Fund - a high net worth personal lines insurance business in the U.S. - from German insurer Allianz. XL Group plc ( XL ) is in talk with Bermuda-based Catlin Group Ltd. to acquire the latter. Also, The Progressive Corporation ( PGR ) inked a deal to buy the majority stake in ARX Holding Corp., the parent company of American Strategic Insurance and its affiliates.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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