Banking giant Wells Fargo may sell its crop insurance subsidiary, says Reuters, quoting a bank spokeswoman. The subsidiary, Rural Community Insurance Services (RCIS), is one of the three largest crop insurers and could bring a sales price of $1 billion. RCIS generates more than $2 billion in crop insurance premiums annually. “A combination of low interest rates and extreme weather such as flooding and drought have combined to make the business unattractive to many financial institutions and companies of late,” said Reuters. It also said regulatory restrictions are prompting some banks to reconsider underwriting crop insurance policies.
Wells Fargo told Reuters that it was reviewing strategic options for RCIS that could include a sale excluding Wells Fargo Insurance Crop Agency, its brokerage arm.
Monsanto’s Climate Corp sold its crop insurance business recently and Deere and Co got out of the business in 2014. USDA lists 18 crop insurance providers for this year. The government pays an average 62 percent of crop insurance premiums, pays part of the adminstrative costs to deliver insurance, and shoulders a large share of the losses during widespread disasters.