QBE spends $565m on US crop insurer NAU

QBE Insurance Group has agreed to acquire NAU Country Insurance Company and its holding companies.

NAU is an underwriter and manager of multi-peril crop insurance business in the US. The acquisition is subject to regulatory approvals. Completion is expected in July 2010.

QBE will pay US$565m and the net tangible assets acquired will be US$217m. The acquisition will be funded from existing resources and, subject to catastrophes not exceeding the allowances made, will be earnings per share accretive in the first year.

In 2009, NAU wrote US$976m of gross written premiums. Net earned premium was US$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 US$92.5m.

NAU is the third largest writer and manager of Multi-Peril Crop Insurance (MPCI) in the US.

QBE’s chief executive Frank O’Halloran 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. NAU is a very well managed and profitable crop insurance provider in the US with excellent systems. Synergies are expected from savings in reinsurance costs and cross selling of QBE’s various agricultural insurance products to NAU’s client base.”

He added: “The purchase price relative to book value reflects the high quality of NAU’s underwriting and management business and the fact that the substantial majority of the 2010 profits will be earned in the second half of the calendar year.”