|By DOUG SCHMITZ
WEST DES MOINES, Iowa — In a move that would double the size of its crop insurance business and enhance its farmer niche base, Farm Bureau Mutual Insurance Co. (FBMIC) announced on Jan. 20 the purchase of Crop1 Insurance Direct, Inc.
“This acquisition will strengthen both organizations,” said Bruce Trost, FBMIC executive vice president, of the merger. “Crop1’s position as an innovator and market leader brings additional expertise to Farm Bureau Mutual’s crop insurance program, and Crop1 will benefit from the strength of the Farm Bureau brand."
Established more than 65 years ago, FBMIC has been committed to serving farmers and ranchers with innovative products, unparalleled service and the most competitive insurance premiums available, said Steve Baccus, chair of the FBMIC board of directors.
“The ‘marriage’ of these two innovators through this acquisition will create an entirely new standard for crop insurance value within the agriculture industry,” said Baccus, who’s also president of the Kansas Farm Bureau Federation.
In 2003, Crop1 became the nation’s first USDA-approved insurance company to offer the Premium Reduction Plan under the USDA’s Risk Management Agency.
“Crop1 Insurance has taken an innovative approach to delivering the best possible crop insurance to today’s producers,” said Billy Rose, chief executive officer of Crop1, which is headquartered in Des Moines, Iowa.
“Our Premium Saver software demystifies crop insurance for producers and helps them pinpoint the best combination of coverages for their individual circumstances. Our discounts are the icing on the cake,” he said. “We’ve saved America’s crop producers more than $4 million in premium over the last four years.”
Trost said the transaction is consistent with the FBMIC’s mission.
“This acquisition will help us to expand service to our farmer market,” Trost said. “Crop1’s technology and proven savings will help us provide innovative and affordable crop insurance to meet the unique needs of crop producers throughout our marketing territory – we’re a winning combination that’s great for agriculture.”
Rose said Crop1 has saved its customers about $1,000 per year in premium costs – especially since Congress will end USDA funding for this coverage in 2007.
“We’re delighted that this transaction allows Crop1 to offer a savings to more crop producers across a broader geography,” he said.
Trost added that FBMIC plans to offer the discount through its own agents and independent agents who have been working with Crop1.
Crop1, a wholly-owned FBMIC subsidiary, is one of three property-casualty insurance companies managed by FBL Financial Group, Inc. (NYSE: FFG), an insurance and financial services holding company based in West Des Moines.
“Going forward, producers in the new combined marketing footprint will have easier access to the most innovative and affordable crop insurance program available,” Trost said.
Under the new plan, Crop1 would serve the following 21 states during the 2006 crop year: Arizona, California, Colo-rado, Iowa, Idaho, Illinois, Indiana, Kansas, Michigan, Minnesota, Miss-ouri, North Dakota, Nebraska, New Mexico, Ohio, Oklahoma, Oregon, South Dakota, Texas, Washington and Wisconsin.
Rose said he estimated the FBMIC-Crop1 merger would result in about 4 percent of the total U.S. crop insurance market.
Rose added that the amount of the acquisition would not be made public.
“Some of that purchase price would also depend on Crop1’s future results,” he said.
“Investments made in Crop1 are designed to benefit the Farm Bureau customers over the long run. Because it is a long-run investment, it will pay out over time.”
This farm news was published in the February 1, 2006 issue of Farm World.