AmAg, developer of the popular Crop Revenue Coverage (CRC) product, will stop underwriting crop insurance policies and exit the crop insurance business by the first quarter of '03.
AmAg, regarded as the largest crop insurance company, cited a tenuous capital position and the likelihood of continued financial losses as reasons for the decision. The company reported an estimated loss of $62.2 million in the third quarter of '02 from its crop insurance and underwriting operations. It attributes the loss to widespread drought in the company's areas of operation.
AmAg signed a non-binding letter of intent to sell some of its crop insurance assets to Rain and Hail LLC. The proposed sale would cover AmAg's book of business for '03 Multi-Peril Crop Insurance policies. For '02, USDA's Risk Management Agency will act as the guarantor for AmAg's federally reinsured policies.