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Cybernet Data Systems Inc.

American Financial Group to Acquire Crop Risk Services from American International Group

Strategic Insights

— 1 min read

American Financial Group, Inc. and American International Group, Inc. have announced a definitive agreement for the purchase of Crop Risk Services by AFG. Under the terms of the transaction, AFG will acquire CRS for $240 million in cash, subject to certain closing adjustments. The acquisition is expected to be completed during the third quarter of 2023, pending regulatory approvals and satisfaction of other customary closing conditions. This purchase expands AFG's crop insurance operations and will strengthen their position as the fifth largest provider of multi-peril crop insurance in the United States.

Key Takeaways:

  • AFG will purchase Crop Risk Services from AIG for $240 million in cash, subject to certain closing adjustments.
  • The acquisition is expected to be completed during the third quarter of 2023, pending regulatory approvals and satisfaction of other customary closing conditions.
  • AFG's Great American Insurance Group will become the eighth largest provider of multi-peril crop insurance in the United States, with combined operations generating gross written premiums of approximately $2.1 billion in 2022.
  • The combined company will have approximately 450 employees.
  • Skadden, Arps, Slate, Meagher & Flom LLP acted as legal counsel for AFG, while Evercore Group L.L.C. and Sidley Austin LLP acted as financial advisor and legal counsel, respectively, for AIG.
  • AFG will use cash on hand to fund the acquisition, and AIG will receive $240 million in cash at closing.
  • The transaction is expected to generate significant excess capital for AFG to use for additional share repurchases or special dividends.

Statistics:

  • 2022 gross written premiums for CRS: approximately $1.2 billion
  • 2022 gross written premiums for Great American's Crop Division: approximately $1.8 billion
  • Expected combined operations' gross written premiums in the United States: approximately $2.1 billion (2022)
  • Number of employees for the combined company: approximately 450
  • Expected date of closing: third quarter of 2023
  • Purchase price: $240 million in cash, subject to certain closing adjustments

Sources:

  • American Financial Group Press Release, May 2, 2023
  • American International Group Press Release, May 2, 2023
  • SEC Form 8-K, filed May 3, 2023, by American Financial Group, Inc.
  • AIG's website: www.aig.com
  • Great American Insurance Group's website: www.GreatAmericanInsuranceGroup.com
  • American Financial Group's website: www.AFGinc.com

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