QBE Insurance Group has bought a US-based insurance business for $US565 million ($604.08 million) and says the acquisition will be earnings per share accretive in year one.
QBE said that it had bought NAU Country Insurance Company, a multi-peril crop insurance business headquartered in Ramsay, Minnesota, with offices in the US midwest and in California.
Net tangible assets acquired will be $US217 million ($232.01 million), the Sydney-based QBE said in a statement.
Multi-peril crop insurance is a US government sponsored program to assist farmers with insurance of crops, QBE said.
NAU was the third-largest insurer in that sector with about an 11 per cent market share.
QBE chief executive Frank O'Halloran said the acquisition was in line with the company's long-term strategy of acquiring specialist businesses to enhance the company's diversification and distribution.
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"Synergies are expected from savings in reinsurance costs and cross selling of QBE's various agricultural insurance products to NAU's client base," Mr O'Halloran said in the statement.
"The purchase price relative to book value reflects the high quality of NAU's underwriting and management business."
In 2009, NAU wrote $US976 million ($1.04 billion) of gross earned premium, while net earned premium was $US354 million ($378.49 million), QBE said.
Profit after tax was $US92.5 million.
"The substantial majority of the 2010 profits will be earned in the second half of the calendar year," Mr O'Halloran said.
The deal was expected to be completed by July 2010.
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