QBE Insurance Group has agreed to acquire NAU Country Insurance Company and its holding companies ('NAU'). The acquisition is subject to regulatory approvals and is expected to be completed in July 2010.
NAU is an underwriter and manager of Multi-Peril Crop Insurance (MPCI) in the US. MPCI is a department of agriculture program that provides protection against weather-related and other unavoidable causes of crop loss. NAU operates 10 offices across the US and has around 1,600 independent agents.
According to QBE, in 2009, NAU wrote $976m of gross earned premium. Net earned premium was $354m, the combined operating ratio, that is the ratio of claims, commissions and expenses to net earned premium, was 61.3% and profit after tax was $92.5m.
The company said that the purchase price is $565m and net tangible assets acquired will be $217m. The acquisition will be funded from existing resources and, subject to catastrophes not exceeding allowances made, will be earnings per share accretive in year one.
Frank O’Halloran, CEO of QBE, said: “The acquisition is in line with QBE’s long term strategy of acquiring specialist businesses to further enhance our significant product diversification and distribution. Synergies are expected from savings in reinsurance costs and cross selling of QBE’s various agricultural insurance products to NAU’s client base.”