USDA Refuses Approvals for Sale of Acceptance Crop Policies; American Growers Under Supervision

Acceptance Insurance Companies Inc. announced that Rain and Hail, L.L.C and others have discontinued efforts to purchase its crop insurance assets, mainly its American Growers Insurance Company (AGIC) subsidiary, following the refusal of the U.S. Department of Agriculture’s Risk Management Agency (RMA), which regulates and reinsures private crop insurance, to approve certain terms of the transaction.

“RMA will not allow the transaction as set forth in the terms of the Non-Binding Letter of Intent,” said the bulletin. Rain and Hail had sought waivers from the RMA of certain procedures, but the agency declined to five them; it indicated that to do so would not be in the best interests of policyholders.

AGIC also said it had received a letter from the RMA directing it not to sell any new insurance contracts subject to reinsurance by the Federal Crop Insurance Corporation, and asking the company “to continue servicing all existing federally reinsured insurance contracts,” including the adjustment and payment of insured losses and expenses associated with claims adjusting. AGIC said it would “continue normal claim adjusting activities, and processing of policies accepted or renewed prior to November 23, 2002, as the Order permits. The RMA said its main concern was to make sure that all claims are paid in full and on time.

AGIC also stated that as a result of these developments the Director of the Nebraska Department of Insurance has issued an Order under Nebraska law placing AGIC under supervision. The Order directs AGIC not to “undertake, engage in, commit to, initiate, accept or renew any insurance business,” or engage in other than routine business. AGIC said it had met and conferred with Department representatives and would implement the Order immediately.

Topics Agribusiness