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Member, Beacon International Group, Ltd.
ZURICH (Bloomberg)—ACE Ltd., the Zurich-based insurer with operations in more than 50 countries, agreed to pay $1.1 billion in cash to buy a majority stake in Rain & Hail Insurance Service Inc. and expand coverage of crops in the United States.
The deal is expected to be completed by the end of this year, ACE said Tuesday in a statement distributed by Business Wire. ACE already holds about 20% of the common stock in the Johnston, Iowa-based insurer and said the deal will immediately add to earnings and book value per share. Employees of Rain & Hail presently own the company.
ACE, led by CEO Evan Greenberg, is adding to the business protecting U.S. farmers against losses after the government this year reduced subsidies for the policies. The company said in July that the changes could work in favor of the largest insurers in the business against regional competitors.
“This is a business we know well, and we project a return on capital in excess of our 15% hurdle rate,” Mr. Greenberg said in the statement.
ACE gained 15 cents to $56.83 in early trading at 8:32 a.m. in New York. The company has gained about 12% this year in New York Stock Exchange composite trading.