On Monday, Everest Re Group Ltd. announced that it bought Heartland Crop Insurance Inc. in an effort to expand into a different area of the insurance industry. Everest Re paid $55 million for Heartland, plus an agreed upon value of the net assets of the company, with an additional contingency of up to $13.5 million based on future performance.
With estimated premium of $300 million, Heartland ranks among the larger underwriters of U.S. crop insurance, Everest Re noted. "Heartland provides us the opportunity to grow and diversify our insurance platform into a market that has very attractive underwriting dynamics," Everest Re Chief Executive Joseph Taranto said in a statement.
"The acquisition represents a key strategic step towards building out our insurance business into shorter tail specialty lines and is expected to be accretive to earnings in the first year." Everest Re shares rose 38 cents to $85.20 in Monday trading.