The world’s largest farm equipment maker, Deere and Co., hired Citigroup to help it decide whether to sell its crop insurance wing, says Insurance Journal. Deere has sold an irrigation unit and its interest in a landscaping business in the past year. Insurance Journal quoted a Deere spokesman as saying, “While crop insurance provides a unique and important touch point with our agricultural customers, we have determined that the federal crop insurance program itself is not core to John Deere.” Recent droughts and a decline in commodity prices has made insurance less profitable.
Crop insurance premiums, at $9.93 billion, are down by 16 percent this year compared to one year ago, say USDA data. Growers insured 290.8 million acres this year, down from 296.1 million acres in 2013 and 293.9 million acres in 2012. USDA pays 62 cents of each $1 in premium, pays part of overhead costs for delivering insurance and shares in the losses in bad years. Insurers are required to accept all applicants at rates set by USDA.