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ACE TO ACQUIRE RAIN AND HAIL INSURANCE SERVICE
Sep. 15, 2010
Source: ACE Limited news release
ACE Limited has signed a definitive agreement to acquire all of the outstanding common stock of Rain and Hail Insurance Service Inc. not currently owned by ACE for approximately $1.1 billion in cash. A pioneer in crop insurance that has served America's farmers since 1919, Rain and Hail, headquartered in Johnston, IA, is the second largest crop insurance underwriter, providing comprehensive multiple peril crop and crop-hail insurance protection to customers in the U.S. and Canada.
ACE currently owns approximately 20 percent of the outstanding common stock of Rain and Hail, which will continue to operate as a separate and distinct franchise within the company's ACE Westchester division and Insurance-North America operations.
"This transaction is a natural extension of our long-term, valued relationship with Rain and Hail and our company's specialty lines focus," said Evan G. Greenberg, chairman and CEO, ACE Limited. "Rain and Hail is a leader in the crop insurance business, and over the course of our relationship with them, we have been impressed by their best-in-class management team and the strength and reputation of their franchise across North America.
"The addition of Rain and Hail to the ACE Group is financially attractive to our shareholders and will produce results that are immediately accretive to our earnings, return on equity and book value per share," said Greenberg. "This is a business we know well, and we project a return on capital in excess of our 15-percent hurdle rate."
The transaction, which is subject to regulatory approvals, the approval of Rain and Hail shareholders and other customary conditions, is expected to be completed by the end of 2010. The purchase price is subject to adjustment to reflect the book value of Rain and Hail as of Dec. 31, 2010. ACE expects to fund the merger consideration for the transaction with available cash.
Celebrating 25 years of insuring progress, the ACE Group is a global leader in insurance and reinsurance serving a diverse group of clients.
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